India’s annual rate of inflation based on the Wholesale Price Index (WPI) eased further to a 14-month low of 0.39% in May, down from 0.85% in April and 2.05% in March, according to data released by the Ministry of Commerce and Industry on Monday.
The month-over-month change in WPI inflation during May was in the negative zone at (-0.06%) compared to April, reflecting a continuing downward trend in inflation. A decline in the prices of food items as well as fuels such as petrol and diesel contributed to the negative month-on-month inflation rate.
The country’s inflation rate based on the Consumer Price Index (CPI) also declined to 2.82% in May 2025, compared to the same month in the previous year. This marks the lowest level of retail inflation since February 2019, according to figures released last week.
Food inflation declined to 0.99% in May — the lowest since October 2021. This is the seventh consecutive month of decline in food inflation, largely due to improved agricultural output.
The Reserve Bank of India (RBI) has revised its inflation outlook for 2025–26 downward — from the earlier forecast of 4% to 3.7%, RBI Governor Sanjay Malhotra said on Friday. The sharp decline in inflation has enabled the RBI to implement a 50 basis point cut in the repo rate, reducing it from 6% to 5.5%, as part of its latest monetary policy review to spur economic growth.
Additionally, the RBI announced a 100 basis point reduction in the Cash Reserve Ratio (CRR), from 4% to 3%, to be implemented in four tranches of 25 basis points each. This measure is expected to inject Rs 2.5 lakh crore into the banking system, enhancing liquidity and supporting credit flow.
Malhotra highlighted that inflation has significantly softened over the past six months — falling from above the upper tolerance band in October 2024 to well below the target. He noted signs of broad-based moderation.
“The near-term and medium-term outlook now gives us the confidence not only of a durable alignment of headline inflation with the target of 4%, as expressed in the last meeting, but also the belief that during the year, it is likely to undershoot the target slightly,” he said.
IANS