Retail inflation in India has fallen to its lowest level in eight years, reaching 1.6% in July 2025, mainly because food prices have gone down. This is the ninth month in a row that inflation has slowed, which is a positive sign for the economy, especially at a time when global trade tensions are high.
According to data from the National Statistics Office (NSO), the July inflation rate was lower than 2.1% in June and much lower than 3.6% in July 2024. This is the first time in eight years that inflation has dropped below 2%.
Food Prices See Big Drop
Food inflation fell by 1.8% in July, compared to a 1% drop in June. This sharp fall is due to a good base effect from last year and lower prices of vegetables, pulses, cereals, eggs, sugar, transport, and education.
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- Rural inflation: 1.2%
- Urban inflation: 2.1%
According to Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI:
- Food inflation is the lowest since January 2019 (-1.8% now vs. -2.2% then).
- Core inflation (excluding food and fuel) also dropped to 3.9%, the lowest in six months.
- If gold prices are excluded, core inflation fell further to 2.96%.
Biggest Price Drops in July:
- Vegetables: -20.7%
- Pulses: -13.8%
- Food & beverages overall: -0.8%
Experts say the RBI is likely to keep interest rates unchanged for now and will decide based on how the recent US tariffs affect India’s economic growth.
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