Business News: The country's retail and wholesale inflation rates have fallen significantly. The interesting thing is that retail inflation fell by more than 70 basis points in June, which exceeded everyone's expectations. After that, retail inflation dropped to 2.1%. The major concern now is whether the effect of lower inflation would be visible in average people's loan EMIs. There's a reason for that. Retail inflation has declined by more than 70 basis points. The RBI has already cut interest rates three times this year and twice in the current fiscal year. After three consecutive rate cuts, the RBI's repo rate has dropped by 1% to 5.5%.
Big drop in retail inflation
With a better monsoon and lower prices for basic products such as vegetables, retail inflation stayed at a six-year low of 2.1 percent in June. This is well below the Reserve Bank of India's satisfactory standard. The CPI-based inflation rate was 2.82 percent in May and 5.08 percent in June 2024. The inflation rate has been steadily dropping since November 2024. According to the NSO, yearly CPI-based inflation was 2.1 percent in June of this year.
It stated that gross inflation in June this year fell by 0.72 percent as compared to May. This is the lowest level of inflation since January 2019. Previously, the lowest rate of inflation was 1.97 percent in January 2019. According to the NSO, the large drop in inflation and food inflation in June 2025 is mostly due to a favourable comparative basis and lower prices for vegetables, pulses and their products, meat and fish, cereals and products, sugar and confectionary, milk and its products, and spices.
Wholesale inflation also declined
Meanwhile, wholesale inflation has slowed, falling to 0.13 percent below zero in June, the lowest level in 19 months. The wholesale inflation rate has fallen mostly as a result of lower food and fuel prices, as well as a softening of manufactured product prices. WPI-based inflation was 0.39 percent in May. It was 3.43% in June of last year. According to a statement issued by the Ministry of Industry, the decrease in inflation in June was mostly due to lower costs for food products, mineral oils, basic metals production, crude petroleum, and natural gas, among other things.
Average inflation in the country has come down
According to analysts, retail inflation has dropped by more than 70 basis points. A 35 to 50 basis point cut is possible in this scenario. If this does not happen, the consequences will be rather concerning. Experts also say the country's average inflation has fallen far lower than the RBI's estimate.
