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Informist, Tuesday, Aug. 12, 2025

 

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--India Jul CPI inflation 1.55% vs 2.10% Jun
--Informist poll estimated India Jul CPI inflation at 1.3%
--India Jul CPI food inflation -1.76% vs -1.01% Jun
--India Jul CPI rural inflation 1.18% vs 1.72% Jun
--India Jul CPI urban inflation 2.05% vs 2.56% Jun
--India Jul CPI general index up 0.9% on month
--India Jul CPI food price index up 2.0% on month
--India Jul CPI cereals and products index down 0.1% on month
--India Jul CPI vegetable index up 11.6% on month
--India Jul CPI pulses and products index down 1.0% on month
--India Jul CPI oils and fats index up 2.0% on month
--India Jul CPI food, beverage index up 1.8% on month
--India Jul CPI housing index up 0.5% on month
--India Jul CPI clothing, footwear index up 0.2% on month
--India Jul CPI fuel and light index down 0.1% on month
--India Jul CPI miscellaneous index up 0.4% on month
--India Jul CPI inflation of 1.55% lowest since June 2017 
--India Jul CPI core inflation 4.1% vs 4.4% Jun

 

NEW DELHI – India's headline CPI inflation fell to 1.55% in July, the lowest print since June 2017, mainly because of a statistical effect of a high base, data released by the statistics ministry Tuesday showed. This is only the third time in the current series when CPI inflation has been below 2%. The lowest CPI inflation print in the current series is 1.46% in June 2017.

 

At 1.55%, CPI inflation in July was higher than the consensus estimate. According to an Informist poll, headline inflation was seen at 1.3% in July. CPI inflation was 3.60% a year ago and 2.10% in June.

 

This is the ninth consecutive month when retail inflation has declined and the sixth month in a row when it has stayed below the Reserve Bank of India's medium-term target of 4.0%.

 

The fall in headline inflation would provide RBI's Monetary Policy Committee room to further support growth, having reduced the repo rate by 100 basis points in 2025 so far. The MPC left the repo rate unchanged at 5.50% last week even as the central bank lowered its inflation forecast for the current financial year by 60 bps to 3.1%. The RBI also lowered the inflation forecast for the September quarter by 130 bps to 2.1%.

 

In July, food inflation remained in the negative zone for the second consecutive month. Food inflation was (-)1.76% in July, lower than (-)1.01% in June and the lowest since January 2019. Sequentially, however, retail food prices rose 2.0% in July, which led to a 0.9% on month rise in the overall index of the CPI from June. Vegetable prices led the rise in food prices with a 11.6% on month increase in July. 

 

Core inflation--or inflation without food and fuel items--fell to 4.1% last month from 4.4% in June. This is the first time core inflation has declined compared to the previous month since December.

 

Rural inflation fell to 1.18% in July from 1.72% in the previous month. Urban inflation also moderated to 2.05% last month from 2.56% in June.

 

Inflation is expected to rise from hereon, with ICRA projecting the headline print at around 2.0% in August. The RBI projects inflation to rise to 3.1% in the December quarter and then to 4.4% in the March quarter. Inflation is then seen rising to 4.9% in Apr-Jun 2026.

 

"The impact on policy decision will be muted as this has already been buffered," Madan Sabnavis, chief economist at Bank of Baroda, said. "The tariff issue could have some impact on crude oil price for India but the impact, if at all, would be more on WPI as the CPI components are regulated by the government."  

 

Some economists expect the MPC to leave interest rates unchanged in October but some see a chance of another reduction in the repo rate because of expectations of a slowdown in growth. According to Joe Maher, assistant economist at Capital Economics, the fall in inflation in July raises the prospect of the MPC cutting interest rates further this year. "But with inflation set to rebound in the coming months and the central bank maintaining its high barrier to easing at its meeting last week, we suspect it may not be enough to prompt a resumption in the easing cycle," Maher said in a note.  

 

The following table details sequential and annual changes in the main components of the CPI (Combined):

 

	Weight	Index for July	Month-on-month change (in %)	Year-on-year change (in %)
				July	June
Cereals and products	9.67	197.1	(-)0.1%	3.03%	3.73%
Meat and fish	3.61	229.3	(-)0.6%	(-)0.61%	(-)1.62%
Egg	0.43	198.7	1.8%	2.26%	2.57%
Milk and products	6.61	191.1	0.3%	2.74%	2.80%
Oils and fats	3.56	192.1	2.0%	19.24%	17.75%
Vegetables	6.04	212.0	11.6%	(-)20.69%	(-)18.92%
Pulses and products	2.38	184.3	(-)1.0%	(-)13.76%	(-)11.76%
Sugar and confectionery	1.36	135.3	0.0%	3.28%	3.52%
Spices	2.5	220.9	0.0%	(-)3.07%	(-)3.03%
Food and beverages	45.86	201.6	1.8%	(-)0.84%	(-)0.20%
Pan, tobacco and intoxicants	2.38	213.3	0.3%	2.45%	2.41%
Clothing and footwear	6.53	197.1	0.2%	2.50%	2.55%
Housing	10.07	185.7	0.5%	3.17%	3.18%
Fuel and light	6.84	180.7	(-)0.1%	2.67%	2.55%
Miscellaneous	28.32	192.9	0.4%	5.01%	5.49%
General Index	100	196.0	0.9%	1.55%	2.10%
Consumer Food Price Index	39.06	200.7	2.0%	(-)1.76%	(-)1.01%

 

Source: Ministry of Statistics and Programme Implementation

 

End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

 

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