Retail inflation falls to 2.82% in May, sharp drop from UPA-era highs

India's retail inflation has dropped to a 75-month low of 2.82 per cent in May 2025, with food inflation easing to just 0.99 per cent.

The data, shared by Infoindata on social media platform X, underscores a significant achievement for Prime Minister Narendra Modi-led government, which has managed to keep inflation largely under control over the past 11 years -- marking a sharp contrast to the UPA era, when double-digit inflation had become a regular concern.

According to the Ministry of Statistics, May's retail inflation is the lowest since February 2019.

Food inflation, too, hit its lowest level since October 2021 and has been on a declining trend for the seventh straight month, supported by strong agricultural output.

The latest inflation drop is largely due to falling prices of essential food items such as pulses, vegetables, fruits, cereals, sugar, eggs and household goods.

The easing of global crude oil prices has also helped bring down fuel-related inflation.

This consistent moderation has prompted the Reserve Bank of India to revise its inflation forecast for FY2025-26 from 4 per cent to 3.7 per cent.

RBI Governor Sanjay Malhotra said the softening of prices over the last six months -- from levels above the RBI's upper tolerance band in October 2024 to well below the 4 per cent target -- shows broad-based improvement.

The RBI now expects inflation to remain below or near target throughout the year, with CPI projections set at 2.9 per cent for Q1, 3.4 per cent for Q2, 3.9 per cent for Q3, and 4.4 per cent for Q4.

This favourable inflation environment enabled the central bank to announce a surprise 50 basis point cut in the repo rate, bringing it down to 5.5 per cent.

Additionally, the RBI slashed the cash reserve ratio by 100 basis points in four tranches, a move expected to inject Rs 2.5 lakh crore into the banking system and stimulate credit growth.