India Retail Inflation Drops to Eight-Year Low 1.55% in July

India's retail inflation, measured by the Consumer Price Index (CPI), dropped to 1.55% in July 2025, marking the lowest rate since June 2017. This decline, the ninth consecutive monthly decrease, is largely driven by lower food prices, especially vegetables and cereals, and a favorable base effect. Food inflation recorded a negative rate of -1.76%, with significant decreases observed in pulses, transport, education, and other sectors. Both rural and urban areas saw declines in headline and food inflation, with rural inflation at 1.18% and urban inflation falling to 2.05%. The Reserve Bank of India (RBI) highlighted that while headline inflation is at a multi-year low, core inflation remains steady around 4%, and inflation is expected to rise above 4% in the fourth quarter of FY26 due to base effects and demand-side pressures. The RBI also revised its inflation forecast downward to 3.1% for the current fiscal year, noting that the current low inflation is largely due to volatile food prices and improved agricultural supply conditions.