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Indian Express
6 days ago
- Business
- Indian Express
Retail inflation slows to 2.1% in June, opens room for more RBI rate cuts
India's headline retail inflation rate slowed more than expected to a 77-month low of 2.1 per cent in June from 2.82 per cent in May as food prices fell 1.06 per cent from a year ago, aided by a favourable base effect, data released on Monday by the Ministry of Statistics and Programme Implementation (MoSPI) showed. The fall in inflation based on the Consumer Price Index (CPI) for the eighth consecutive month potentially opens up room for further rate cuts by the Reserve Bank of India (RBI) in the coming months. So far in 2025, the Monetary Policy Committee (MPC) has reduced the policy repo rate by 100 basis points (bps) to 5.5 per cent, although it tightened its stance to 'neutral' in June and said monetary policy is left with 'very limited space to support growth'. However, with CPI inflation extending its run below the RBI's medium-term target of 4 per cent to a fifth consecutive month, economists think average inflation for 2025-26 is likely to be much lower than the central bank's forecast of 3.7 per cent. 'We continue to expect the RBI to pause in the August policy as it watches the monsoon outturn to ascertain durability of food inflation trends. While earlier we were seeing room for a cut in the December policy, the June CPI print has increased the probability of RBI reducing repo rate by 25 bps in the October policy,' Suvodeep Rakshit, Chief Economist at Kotak Institutional Equities, said. Data also released on Monday by the commerce ministry showed wholesale prices fell in June compared to a year ago, with the Wholesale Price Index (WPI) based inflation rate, at -0.13 per cent, dropping into the deflationary zone. This was the first time in 20 months that wholesale inflation had fallen below zero. On the retail price front, June saw food prices fall for the first time since February 2019 on a year-on-year (YoY) basis thanks to a favourable base effect even as prices rose last month on a sequential basis. 'The prices of vegetables were down 19 per cent YoY, the sharpest pace of decline since December 2022. In addition, prices of pulses were down 11.8 per cent YoY in the same period, fastest fall in prices in over seven years. The meat & fish segment also witnessed a fall in prices in June 2025, for the third straight month. Even the cereals inflation was down to a 41-month low of 3.7 per cent due to better production,' Paras Jasrai, Associate Director and Economist, India Ratings and Research, said. On a month-on-month basis, the Consumer Food Price Index was up 1.1 per cent in June, almost double the 0.6 per cent sequential increase seen in the overall CPI. However, economists see headline inflation falling even further. 'Mandi prices so far are suggesting manageable July perishable food price pressures, with July month tracking 1.7-1.8 per cent as of now,' Madhavi Arora, Chief Economist at Emkay Global Financial Services, said. CPI inflation for rural areas has already fallen below 2 per cent – which is the lower bound of the RBI's flexible inflation target of 2-6 per cent – to 1.72 per cent in June from 2.59 per cent in May. Urban retail inflation also declined to 2.56 per cent from 3.12 per cent. Meanwhile, core inflation – or inflation excluding food and fuel, whose prices can be volatile – edged up to 4.4 per cent in June, the highest since September 2023, according to calculations by The Indian Express. While core inflation is seen as an indicator of underlying demand in the economy, its continued rise in 2025 – it stood at 3.6 per cent in December 2024 – has primarily been due to increasing prices of precious metals. Gold inflation, for instance, rose to a 58-month high of 35.98 per cent in June, as per the latest CPI data. A June CPI inflation rate of 2.1 per cent means it averaged 2.7 per cent in April-June, lower than the RBI's forecast of 2.9 per cent. Economists, who were already of the opinion that the Indian central bank's forecast of 3.7 per cent for 2025-26 as a whole was too high, now see it being undershot by an even greater margin. According to Arora of Emkay Global, average CPI inflation in 2025-26 could be 80-100 bps lower than the RBI's forecast. Falling inflation is also expected to raise real wages of households, according to Jasrai of India Ratings, whose calculations suggest that a 100 bps increase in real wages leads to a 106 bps increase in consumption demand. This boosts GDP growth by 60 bps, Jasrai said. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
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Business Standard
6 days ago
- Business
- Business Standard
India's retail inflation eases to 2.1% in June, lowest since Jan 2019
India's retail inflation, measured by the Consumer Price Index (CPI), eased to 2.1 per cent in June 2025, down from 2.82 per cent in May, according to data released by the Ministry of Statistics and Programme Implementation on Monday. This is the lowest year-on-year inflation recorded since January 2019, when the figure stood at 2.05 per cent, the ministry said. Inflation for June also remained below the Reserve Bank of India's (RBI) medium-term target of 4 per cent, continuing a recent trend of subdued price pressures. Food inflation turns negative in June Food inflation, measured by the Consumer Food Price Index (CFPI), turned negative across both rural and urban areas in June. Rural food inflation stood at -0.92 per cent, while urban areas recorded -1.22 per cent, a significant drop from May figures of 0.95 per cent and 0.96 per cent, respectively. The food inflation was also the lowest since January 2019. 'The significant decline in headline and food inflation in June 2025 is mainly attributed to the favourable base effect and a decline in inflation across categories such as vegetables, pulses, cereals, meat and fish, sugar, milk, and spices,' the ministry said in a statement. Rural and urban inflation both ease In rural areas, overall inflation fell to 1.72 per cent in June, down from 2.59 per cent in May. In urban areas, inflation eased to 2.56 per cent, compared to 3.12 per cent in the previous month. Urban food inflation showed a steep drop, slipping from 1.01 per cent in May to -1.22 per cent in June. Segment-wise inflation trends Housing inflation rose marginally to 3.24 per cent in June, from 3.16 per cent in May. Fuel and light inflation for rural and urban regions slowed to 2.55 per cent in June 2025 from 2.84 per cent in May. Education inflation increased to 4.37 per cent (from 4.12 per cent). Health inflation inched up to 4.43 per cent (from 4.34 per cent). Transport and communication saw a minor rise to 3.90 per cent, up from 3.85 per cent in May. Among states, Kerala recorded the highest year-on-year inflation in June at 6.71 per cent, with its CPI index rising to 213.1 from 199.7 in June 2024. RBI FY26 inflation forecast In its June bimonthly policy meeting, the RBI had revised its inflation forecast for 2025–26 (FY26) downwards to 3.7 per cent, with the first quarter (April–June) expected to average 2.9 per cent. The central bank projected inflation at 3.4 per cent for Q2, 3.9 per cent for Q3, and 4.4 per cent for Q4 in FY26. Wholesale inflation eases in June Meanwhile, India's Wholesale Price Index (WPI) inflation, announced earlier today, fell to -0.13 per cent in June from 0.39 per cent in May, registering its first negative reading in 2025. The decline was mainly due to falling prices in food articles, fuel and power, and basic metals.
Hans India
06-07-2025
- Business
- Hans India
India's economy has tripled in size over last decade
India's growth story continues to draw global attention, backed by strong fundamentals and consistent performance. Over the past decade, India's economic size has tripled from Rs 106.57 lakh crore in to Rs 331.03 lakh crore in 2024–25, with the GDP growth at a robust 6.5 per cent for the year, according to official figures released on Sunday. The Reserve Bank of India expects this pace to continue into 2025–26. Other projections echo this optimism, with the United Nations forecasting growth of 6.3 per cent this year and 6.4 per cent next year, while the Confederation of Indian Industry places its estimate slightly higher at 6.4 to 6.7 per cent. This sustained performance is being driven by strong domestic demand. Rural consumption has picked up, city spending is rising, and private investment is on the upswing. Businesses are expanding capacity, with many operating near their maximum output levels. At the same time, public investment remains high, especially in infrastructure, while stable borrowing conditions are helping firms and consumers make forward-looking decisions, the statement said. Global conditions, by contrast, remain fragile. The United Nations has described the world economy as being in a "precarious moment", citing trade tensions, policy uncertainties, and declining cross-border investments. Amid this, India continues to stand out as a bright spot, with global institutions and industry bodies expressing confidence in its growth prospects. As part of India's strong macroeconomic fundamentals, inflation in the country has eased sharply, offering relief to both households and businesses. In May 2025, the year-on-year inflation rate based on the Consumer Price Index (CPI) stood at 2.82 per cent. This marks the lowest level since February 2019. It also reflects a drop of 34 basis points from the previous month. Food prices, which often have a big impact on overall inflation, have also cooled. The Consumer Food Price Index (CFPI) recorded an inflation rate of just 0.99 per cent in May 2025. This is the lowest food inflation seen since October 2021. Rural and urban food inflation were almost identical, at 0.95 per cent and 0.96 per cent, respectively. Compared to April 2025, food inflation declined by 79 basis points, showing a clear downward trend in essential items like vegetables and grains. Overall, the Reserve Bank believes that inflation will stay aligned with its medium-term target of 4 per cent. In fact, it may even fall slightly below that level in the coming months. India's capital markets are booming, and the confidence is visible. They have become a powerful engine for economic growth by turning household savings into investments. Despite global tensions and domestic uncertainties, the stock market maintained strong performance by December 2024. It outperformed many other emerging economies, showing how investors, both local and global, trust India's growth story, the statement added.
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Business Standard
12-06-2025
- Business
- Business Standard
Bank of Maharashtra cuts retail loan rates by up to 50 bps post RBI move
Bank of Maharashtra on Thursday announced a reduction of up to 50 basis points in interest rates on retail loans, including home, car, education and other loans linked to the Repo Linked Lending Rate (RLLR). According to the bank, the revised rates are effective from 10 June and align with the recent rate reduction by the Reserve Bank of India (RBI). The bank stated that home loans will now start at 7.35 per cent and car loans at 7.7 per cent. 'This benefit of reduced interest rates reflects the bank's commitment to offer the best financing solutions to all its customers and help them fulfil their dreams,' the bank said. It added, 'In the current interest rate landscape, the bank is making retail loans cheaper to bring in cheer among its customers.' Banking industry Bank of Baroda has also reduced its Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points across various tenors ranging from one month to one year. Additionally, three other public sector banks—Canara Bank, Union Bank of India and Indian Overseas Bank—have cut their External Benchmark Lending Rates (EBLR) by 50 basis points. Canara Bank and Union Bank's repo-linked lending rates now stand at 8.25 per cent, while Indian Overseas Bank's RLLR is 8.35 per cent. These rates apply to retail loans, including home, vehicle and personal loans, as well as loans extended to the micro, small and medium enterprises (MSME) sector. These rate adjustments follow the Reserve Bank of India's decision on Friday to reduce the benchmark repo rate by 50 basis points to 5.5 per cent. The six-member Monetary Policy Committee, chaired by Governor Sanjay Malhotra, voted five to one in favour of the rate cut. The RBI also lowered the Cash Reserve Ratio (CRR) by 100 basis points to 3 per cent in phases, which is expected to inject ₹2.5 lakh crore into the banking system. Inflation data India's retail inflation eased to 2.82 per cent in May from 3.16 per cent in April, primarily due to a slower pace of food price increases, according to government data released on Thursday. In rural areas, headline inflation fell to 2.59 per cent in May from 2.92 per cent in April, while food inflation based on the Consumer Food Price Index declined to 0.95 per cent from 1.85 per cent during the same period.
Indian Express
12-06-2025
- Business
- Indian Express
Fall in food prices pulls down May CPI inflation to 2.82%, lowest since Feb 2019
A fall in prices of fruits, pulses, and cereals helped lower India's headline retail inflation rate to a 75-month low of 2.82 per cent in May 2025, acording to data released on Thursday by the Ministry of Statistics and Programme Implementation (MoSPI), possibly providing some more easing room to the Reserve Bank of India (RBI). At 2.82 per cent, the latest inflation rate based on the Consumer Price Index (CPI) was somewhat lower than economists' expectations of around 3 per cent. CPI inflation stood at 3.16 per cent in April 2025 and 4.80 per cent in May 2024. The last time retail inflation was lower was in February 2019, when it stood at 2.57 per cent. Per MoSPI data, food inflation as measured by the Consumer Food Price Index (CFPI) almost halved to a 43-month low of 0.99 per cent last month from 1.78 per cent in April 2025 as fruit prices declined by 2 per cent month-on-month (m-o-m) while those of pulses were down 1.7 per cent. Cereals also helped to bring down the overall food inflation in May 2025, with prices down 0.6 per cent compared to the previous month. Prices of vegetables, meanwhile, inched up slightly last month from April 2025. However, in year-on-year (y-o-y) terms, retail prices of vegetables were down 13.7 per cent — the sharpest pace of decline since December 2022, according to Paras Jasrai, associate director and economist at India Ratings & Research. Proteins became more expensive on a sequential basis in May 2025. While the price of meat and fish was up 1.5 per cent m-o-m, egg prices rose 2.5 per cent and milk turned 0.7 per cent more expensive in May. Core inflation — which excludes items whose prices are volatile such as food and fuel and is seen as an indicator of underlying demand conditions — inched up to around 4.2 per cent, according to calculations done by The Indian Express. The steady rise in core inflation over the last year-and-a-half or so is suggestive of 'steady demand conditions' in the economy, said Jasrai of India Ratings. In terms of the regional break-up, urban inflation eased to 3.07 per cent in May 2025 from 3.36 per cent the previous month, while rural CPI inflation declined to 2.59 per cent from 2.92 per cent. Inflation in May 2025 was highest in Kerala at 6.46 per cent, while it was lowest in Telangana, at 0.55 per cent. According to Sujan Hajra, chief economist at Anand Rathi Group, the downward trend in CPI inflation is expected to continue through October 2025, with averaging for FY26 likely to undershoot the RBI's latest forecast of 3.7 per cent. ICRA Chief Economist, Aditi Nayar, expects retail inflation to decline further to around 2.5 per cent in June 2025 and average 3.5 per cent in FY26. 'Looking ahead, on a y-o-y (year-on-year) basis, as many as 17 of the 22 food items for which the daily data is released, recorded a lower y-o-y inflation in June 2025 (until June 10, 2025) vis-à-vis May 2025, barring most edible oils and tea,' Nayar said. 'Moreover, the GoI (Government of India) has reduced the import duty on edible oils effective end-May 2025, which would lead to a softening in prices going forward, thereby auguring well for the oils and fats inflation readings through the fiscal, which would also be suppressed by a high base.' Rajani Sinha, chief economist at CareEdge, said that while the India Meteorological Department's forecast of an above-normal monsoon reinforces the favourable outlook for food inflation, the spatial and temporal distribution of the rains will be critical. 'Despite the early onset, monsoon activity has slowed, although it remains early in the season, with potential for recovery in the coming weeks. Weather-related risks will need close monitoring,' Sinha added. While the RBI's Monetary Policy Committee (MPC) last week cut the policy repo rate by an unexpectedly large 50 basis points (bps) to 5.50 per cent, it also tightened the stance of its policy to 'neutral' from 'accommodative', arguing that 'monetary policy is left with very limited space to support growth'. However, economists see the space for more one rate cut from the MPC, although not at the committee's next meeting in August 2025. Jasrai of India Ratings, for instance, expects a status quo on interest rates in August 2025 considering inflation is heading for the RBI's forecast of 2.9 per cent for April-June 2025 and the monetary easing affected so far. 'We expect, at max one more 25 bps cut this fiscal, unless there are surprises from global development or growth declines sharply,' Jasrai said. On Tuesday, the World Bank lowered its global growth forecast for 2025 to 2.3 per cent from its January 2025 prediction of 2.7 per cent citing 'heightened trade tensions and policy uncertainty'. Growth in 2026 is expected to pick up only slightly to 2.4 per cent and further to 2.6 per cent in 2027. While a global recession is not expected, the World Bank's latest projections for the next two years, should they turn out as forecast, would mean average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s, it said. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
