April 2025 CPI inflation at 3.16%; the lowest in last 69 months

14 May 2025 , 03:31 PM

APRIL 2025 INFLATION LOWER THAN EXPECTED

Since October 2024, the headline inflation in India has progressively fallen from a high of 6.21% to 3.16%. This was triggered by food inflation plummeting from 10.87% to 1.78%. For April 2025, headline CPI inflation at 3.16% was 11 bps below the Reuters estimate of 3.27%. What helped taper food prices. Firstly, the robust Kharif and Rabi output last year have resulted in mandis overflowing. Secondly, IMD and SKYMET have predicted a normal to above-normal monsoons this year. But, above all, the government and the private sector have invested in the food supply chain; along with strong policies to smooth supply lines.

FOOD INFLATION LOWER; BUT CORE INFLATION ELEVATED

The last time India saw such low levels of inflation was in early 2021, before the inflation monster set in. The table below captures 13 months data.

Month	Food Inflation (%)	Core Inflation (%)	Headline Inflation (%)
Apr-24	8.70%	3.23%	4.83%
May-24	8.69%	3.12%	4.80%
Jun-24	9.36%	3.14%	5.08%
Jul-24	5.42%	3.39%	3.60%
Aug-24	5.66%	3.40%	3.65%
Sep-24	9.24%	3.49%	5.49%
Oct-24	10.87%	3.67%	6.21%
Nov-24	9.04%	3.64%	5.48%
Dec-24	8.39%	3.58%	5.22%
Jan-25	6.02%	3.67%	4.26%
Feb-25	3.75%	3.95%	3.61%
Mar-25	2.69%	4.10%	3.34%
Apr-25	1.78%	4.05%	3.16%

Data Source: MOSPI & Ministry of Finance Estimates

Here are some key takeaways from the table above.

• Food inflation for April 2025 at 1.78% is down a full 909 bps from the peak of October 2024. Headline inflation has fallen progressively in last 6 months by 305 bps. Food inflation for April 2025 is sharply lower than the previous 12-month average of 7.32%.
  
• Core inflation is tapered from 4.10% to 4.05% in April 2025, driven by gold prices. Supply chain constraints are being built in amidst trade uncertainty. Average core inflation in last 12 months was 3.53%; so, April core inflation is sharply higher.
  
• What about headline inflation? Compared to the average of previous 12 months at 4.63%, April 2025 headline inflation is meaningfully lower at 3.16%. The assumption is that the El Nino effect does not play pranks with the normal monsoon expectations.

Let us turn to whether; the triggers for falling inflation come from rural or urban India? 

NON-FOOD INFLATION: URBAN VERSUS RURAL 

Here is the macro picture. Between March 2025 and April 2025, headline inflation moderated from 3.34% to 3.16%. During this period, headline rural inflation fell from 3.25% to 2.92%, while headline urban inflation was actually up from 3.43% to 3.36%. What about food inflation? Between March 2025 and April 2025, headline food inflation moderated from 2.69% to 1.78%. However, rural food inflation fell from 2.82% to 1.85%, while urban food inflation fell from 2.48% to 1.64%. Urban and rural food prices have fallen sharply.

Non-Food Basket	Non-Food Weights	Rural Inflation	Urban Inflation	Headline Inflation
Clothing	6.32	2.55	2.95	2.70
Footwear	1.04	1.78	2.49	2.07
Clothing and footwear	7.36	2.46	2.93	2.67
Housing	–	–	3.00	3.00
Fuel and light	7.94	2.17	4.34	2.92
Household goods and services	3.75	2.07	3.10	2.51
Healthcare	6.83	4.21	4.32	4.25
Transport and communication	7.60	3.78	3.59	3.73
Recreation and amusement	1.37	1.97	2.95	2.51
Education	3.46	3.91	4.24	4.13
Personal care and effects	4.25	12.74	13.08	12.90
Miscellaneous	27.26	5.07	4.98	5.02

Data Source: MOSPI & Ministry of Finance Estimates

Where is rural India lower and where is urban India lower in non-food inflation? Fuel & lighting saw higher inflation in April. Rural fuel & light inflation was up from 0.94% to 2.17%, while urban fuel & light inflation was up from 2.33% to 4.34%. Now, rural inflation is higher only in transport & communications and in miscellaneous items. In all other non-food items, it is urban inflation that is higher; hinting at a bigger urban role in core inflation spike.

FOOD BASKET: HOW RURAL AND URBAN INDIA STACKED UP?

Food basket, with a weightage of 47.25%, is the most critical swing factor for inflation. In April 2025 food inflation played a key role, tapering from 2.69% to 1.78%.

Food Basket	Food Weights	Rural Inflation	Urban Inflation	Headline Inflation
Cereals and products	12.35	5.40	5.13	5.35
Meat and fish	4.38	-0.22	-0.64	-0.35
Egg	0.49	0.44	1.36	0.83
Milk and products	7.72	2.61	2.88	2.72
Oils and fats	4.21	18.83	15.04	17.42
Fruits	2.88	14.50	13.04	13.80
Vegetables	7.46	-10.87	-11.14	-10.98
Pulses and products	2.95	-5.18	-5.24	-5.23
Sugar and Confectionery	1.70	4.69	4.38	4.59
Spices	3.11	-4.10	-2.05	-3.40
Non-alcoholic beverages	1.37	4.00	4.99	4.40
Prepared meals	5.56	3.82	5.08	4.40
Food Basket	47.25	1.85	1.64	1.78

Data Source: MOSPI & Ministry of Finance Estimates

Here are the key items in the inflation basket across rural and urban segments. 

• Let us start with cereals inflation. The overall cereals inflation for April 2025 was lower at 5.35%. The rural cereals inflation at 5.40% is still higher than the urban cereals inflation at 5.13%.
  
• What about high protein inflation? Overall protein inflation has sobered in April 2025 for milk, eggs, and meat products; with meat inflation in the negative. The fall in high protein inflation has been sharper in rural areas.
  
• Vegetables inflation moderated in the last 5 months from 26.56% to 11.35%, to -1.07%, to -7.04%, and to -10.98% in April 2025. Fall in vegetables inflation was sharper in urban areas. Fruits inflation spiked in previous 4 months from 8.49% to 12.22% to 14.82%, to 16.27%. In April 2025, it slightly sobered to 13.8%.

Not only is headline inflation at a 69-month low, but even food inflation is the lowest since early 2021 at just 1.78%.

LOOKS LIKE A SURE SHOT RATE CUT OF 25 BPS IN JUNE 2025

RBI has already cut rates by 50 bps from 6.5% to 6.0% in the February and April policies. Will there be another rate cut in June 2025? With food inflation at 1.78% and headline inflation at 3.16%, another rate cut almost looks inevitable in June 2025. There is one X-factor. RBI may put rate cuts on hold if the Q4-GDP to be announced on the last day of May 2025, spikes very sharply. However, that does look fairly unlikely.

There are two other areas to look at. The Indian rupee which had weakened to ₹87.5/$, has now bounced back to around ₹84-85/$. Hence, the RBI will not be overly worried about the rupee weakening impact due to rate cuts. Secondly, there were concerns that inflation could spike due to an Indo-Pak war. However, the ceasefire has reduced the prospects of a full-fledged war for now. It looks like another 25 bps rate cut in June is a done deal!