CPI Poll
Jun CPI inflation seen easing to 2.3%, lowest in over 6 yrs
This story was originally published at 17:25 IST on 9 July 2025
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By Shubham Rana
NEW DELHI - India's CPI inflation likely fell to its lowest level in over six years in June on the back of statistical effect of a high base and relatively low food prices. According to an Informist poll of 16 economists, headline inflation in June is seen falling to 2.3%, the lowest level since January 2019.
The estimates for June CPI inflation range from 1.8% to 2.9%. The statistics ministry will release CPI data for June at 1600 IST on Monday. CPI inflation was at a 75-month low of 2.82% in May and 5.08% a year ago.
At 2.3%, this will be the eighth month in a row that inflation would be falling from the previous month. This will also be the fifth consecutive month when CPI inflation would have stayed below the Reserve Bank of India's medium-term target of 4.0%. If the headline print falls to 2.3% in June, as projected, inflation will average 2.7-2.8% in Apr-Jun, 10-20 basis points lower than the RBI's forecast for the quarter.
This could provide the RBI's Monetary Policy Committee more space to support growth. The MPC in June lowered the repo rate by a larger-than-expected 50 bps and changed the stance to neutral. In an interview to a newspaper last month, RBI Governor Sanjay Malhotra said lower-than-expected inflation may offer space for further monetary policy easing.
PRICE MOMENTUM
The base effect in June is such that if the overall index remains unchanged from May, retail inflation would fall to 1.5% in June. An inflation rate of 2.3% in June would translate to a 0.8% rise in the overall index from May.
At 0.8%, the sequential rise in the overall index would be the highest in eight months. Typically, the overall index rises sequentially during the summer months mainly because of rise in vegetable prices. On an average, the overall index has risen 0.9% on month in June in the last 12 years.
Some vegetable prices are already on the rise. According to data from the Department of Consumer Affairs, tomato prices jumped 36% on month in June, while potato prices rose 4% from May. Apart from vegetables, prices of some edible oils and wheat also rose month-on-month in June.
Food inflation, however, is expected to moderate in June because of the high base effect. Teresa John, an economist at Nirmal Bang Institutional Equities, expects food and beverage inflation to fall to 0.2% in June from 1.5% in May.
"Food inflation will continue to be the driving factor and in focus in the next couple of months as it is susceptible to monsoon trends, particularly with regard to spatial distribution (of rainfall)," Union Bank of India said in a report. "We believe that the MPC is likely to stay data-dependent in order to assess policy space for further easing."
Core inflation--which excludes volatile food and fuel items--likely rose to 4.3% in June from 4.2% in May. Core inflation likely rose due to an uptick in gold prices, economists said.
The following is a summary of the poll on CPI inflation in June:
|
ORGANISATION |
CPI INFLATION ESTIMATE |
|
Societe Generale |
1.8% |
|
Nirmal Bang Institutional Equities |
2.18% |
|
ICICI Bank |
2.21% |
|
ANZ Bank India |
2.23% |
|
IDFC FIRST Bank |
2.25% |
|
STCI Primary Dealer |
2.26% |
|
Union Bank of India |
2.3% |
|
ICICI Securities Primary Dealership |
2.3% |
|
HDFC Bank |
2.34% |
|
YES Bank |
2.4% |
|
CareEdge Ratings |
2.5% |
|
India Ratings and Research |
2.5% |
|
ICRA |
2.5% |
|
Bank of Baroda |
2.6% |
|
Capital Economics |
2.8% |
|
Kotak Mahindra Bank |
2.9% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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