Retail inflation slips to a six-year low of 2.1% in June

India’s retail inflation in June eased to 2.10 %, the lowest since January 2019, driven by a sharp fall in food prices, data from the ministry of statistics showed on Monday, 14 July.

Food inflation contracted by 1.06 %, pushing both rural (−0.92 %) and urban (−1.22 %) rates into negative territory.

The decline also reflects a favorable base effect and price corrections in key items such as vegetables, pulses, cereals, meat, dairy, sugar, and spices.

The inflation print remains well below the Reserve Bank of India’s (RBI’s) 4 % target.

The RBI cut its policy repo rate by 50 basis points (bps) to 5.50 % on 6 June, its third cut this year, and shifted its stance from “accommodative” to “neutral.” One basis point is one-hundredth of a percentage point.

It had also reduced the cash reserve ratio by 100 bps to inject liquidity into the banking system.

Governor Sanjay Malhotra described the move as “front‑loading” support to the economy while warning that future policy adjustments will depend heavily on how inflation and growth evolve.

Analysts suggest that the steady slowdown, from 3.16 % in April to 2.10 % in June, gives the RBI room for further easing, though recent central bank commentary indicates that any future cuts will depend on evolving data.

An internal RBI panel has also advised maintaining the 4 % inflation target with a 2–6 % tolerance band, a mandate set till March 2026.

Meanwhile, sustained low inflation strengthens the government’s economic management narrative ahead of upcoming fiscal milestones.

With rural inflation at just 1.72 % and broad-based softness across non-food categories, policymakers now have breathing room to pursue growth-focused measures without risking price instability.

Meanwhile, Wholesale Price Index (WPI) inflation flipped negative in June, signaling further easing on the supply side.

Separate data from the ministry of commerce and industry showed wholesale inflation, measured by the WPI, slipped into negative territory at −0.13 % in June, mainly due to lower prices of food articles, mineral oils, basic metals, and crude petroleum.

The WPI food index rose slightly on the month but showed a year-on-year decline of 0.26 %.

On a month-over-month basis, wholesale prices fell 0.19 % in June, with notable declines in fuel and manufactured products even as primary articles registered modest gains.

Lower input costs, including for food and fuel, could eventually ease pressure on consumer prices, encouraging investment and consumption.

The RBI has projected full-year inflation at 3.7 %, while gross domestic product (GDP) growth is forecast at 6.5 %.