India’s Retail Inflation Drops to Over 5-Year Low, Paving Way for Possible Rate Cuts
Decline in food prices and steady fuel costs contribute to record low CPI figures
April 15, 2025 — New Delhi: India’s retail inflation has dropped to its lowest level in over five years, marking a significant economic development that could open the door for more interest rate cuts by the Reserve Bank of India (RBI).
According to data released by the Ministry of Statistics and Programme Implementation, the Consumer Price Index (CPI)-based inflation eased to 3.1% in March 2025 — a sharp fall from the 5.5% recorded during the same period last year. This is the lowest level recorded since late 2019.
The primary driver behind the drop has been a considerable decline in food inflation, especially in the prices of vegetables, cereals, and edible oils. Fuel prices have also remained largely stable, providing further relief to consumers and policymakers alike.
Economists view this trend as a positive sign for the Indian economy, as it strengthens the case for further monetary easing by the central bank. With inflation well below the RBI’s upper tolerance limit of 6%, analysts expect the Monetary Policy Committee to consider cutting interest rates in upcoming reviews to boost growth.
“This significant drop in inflation gives the RBI much-needed room to act on interest rates and support domestic demand,” said an economist at a leading financial institution.
Lower inflation not only benefits consumers but also eases cost pressures on businesses, potentially driving economic momentum in the months ahead.
The development comes at a crucial time, as the government aims to balance growth with fiscal discipline amid global uncertainties and geopolitical tensions.
More insights and policy reactions are expected in the coming weeks