June 2025 India CPI inflation falls to 77-month low of 2.10%

15 Jul 2025 , 02:35 PM

JUNE 2025 CPI INFLATION FALLS EIGHTH MONTH IN A ROW

Since October 2024, the consumer inflation has been on a downtrend. From a peak of 6.21% in October 2024, headline inflation in India has fallen by 411 bps to 2.10%. This has been triggered by food inflation plummeting from 10.87% to -1.06% in the same period. The June 2025 inflation at 2.10% was not only sharply lower than the May 2025 inflation of 2.82%, but also well below the Reuters consensus estimate of 2.40%-2.50% for June 2025.

The strong Rabi crop last year and the aggressive sowing acreage for Kharif this year have contributed to the food prices coming down. Two of the most vulnerable items in the food basket; vegetables and pulses are showing deep negative inflation for June 2025, which more than offsets the relatively higher inflation in fruits and oil & fats. Record foodgrain production this year has also helped to keep the cereals inflation in check.

FOOD INFLATION PLUMMETS; CORE INFLATION STICKY

The headline inflation is at a 77-month low; the lowest since January 2019. Here is a check.

Month	Food Inflation (%)	Core Inflation (%)	Headline Inflation (%)
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%	4.07%	3.16%
May-25	0.99%	4.17%	2.82%
Jun-25	-1.06%	4.40%	2.10%

Data Source: MOSPI & Ministry of Finance Estimates

Here is what we read from the inflation time series table.

There are interesting takeaways from the inflation data. As much as food and fuel contributed to lowering inflation, the stickier aspect of inflation (core inflation) continues to remain elevated and also rising. That can be attributed to global risks and trade constraints. Let us turn to whether; the triggers for falling inflation come from rural or urban India?

NON-FOOD INFLATION: URBAN VERSUS RURAL

Between May 2025 and June 2025, headline inflation moderated from 2.82% to 2.10%. During this period, headline rural inflation fell from 2.59% to 1.72%, while headline urban inflation was actually up from 3.12% to 2.56%. What about food inflation? Between May 2025 and June 2025, headline food inflation moderated from 0.99% to -1.06%. Rural food inflation fell from 0.95% to -0.92%, while urban food inflation fell from 1.01% to -1.22%.

Non-Food Basket	Non-Food Weights	Rural Inflation	Urban Inflation	Headline Inflation
Clothing	6.32	2.49	2.83	2.64
Footwear	1.04	1.93	2.65	2.23
Clothing and footwear	7.36	2.39	2.86	2.55
Housing	–	–	3.24	3.24
Fuel and light	7.94	1.99	3.54	2.55
Household goods and services	3.75	2.17	3.03	2.56
Healthcare	6.83	4.39	4.51	4.43
Transport and communication	7.60	4.07	3.71	3.90
Recreation and amusement	1.37	2.07	2.82	2.50
Education	3.46	4.09	4.52	4.37
Personal care and effects	4.25	14.71	14.89	14.76
Miscellaneous	27.26	5.58	5.34	5.49

Data Source: MOSPI & Ministry of Finance Estimates

In the non-food basket; urban inflation has been higher in clothing, footwear, fuel, household goods, healthcare, recreation, and education. On the other hand, rural inflation is higher for transport & communication, personal effects, and other items.

FOOD BASKET: HOW RURAL AND URBAN INDIA STACKED UP?

Food basket, with a weightage of 47.25%, is a major swing factor. In June 2025 food inflation tapered from 0.99% to -1.06%.

Food Basket	Food Weights	Rural Inflation	Urban Inflation	Headline Inflation
Cereals and products	12.35	3.68	3.95	3.73
Meat and fish	4.38	-1.90	-1.12	-1.62
Egg	0.49	2.28	3.06	2.57
Milk and products	7.72	2.65	3.07	2.80
Oils and fats	4.21	19.42	14.93	17.75
Fruits	2.88	13.66	11.47	12.59
Vegetables	7.46	-19.04	-18.87	-19.00
Pulses and products	2.95	-11.59	-12.13	-11.76
Sugar and Confectionery	1.70	3.62	3.26	3.52
Spices	3.11	-3.27	-2.58	-3.03
Non-alcoholic beverages	1.37	3.83	5.08	4.32
Prepared meals	5.56	3.70	4.99	4.32
Food Basket	47.25	-0.92	-1.22	-1.06

Data Source: MOSPI & Ministry of Finance Estimates

How do rural and urban inflation compare on the food basket? Rural inflation is comparatively higher in case of oils & fats, fruits, pulses, and sugar & confectionary. On the other hand, urban inflation is higher in case of cereals, meat, eggs, milk, vegetables, spices, non-alcoholic beverages, and prepared meals. Rural inflation is lower in high protein foods.

ONE MORE RATE CUT LOOKS LIKELY

When we had written our inflation our inflation note last month, we had ruled out further rate cuts due to the mega 50 bps rate cut in June and the 100 bps cut in CRR. However, the fall in headline inflation to 2.10% and the fall in food inflation to -1.06% is beyond even the most dovish expectation. Hence, the RBI may opt to pass on some of the benefits of lower inflation to borrowers. This would ensure that the inflation trajectory is not impacted, but at the same time growth gets a fillip through lower cost of funds. That would be like hitting two birds with one stone!