Very big good news has come out for the common man. Retail inflation has come down to a 6-year low in May 2025. The Consumer Price Index (CPI) has fallen from 3.16% in April to 2.82% (2.82 Percent) in May. Although the retail inflation rate was estimated at 2.95% in May, it turned out to be even lower than that, which is a positive sign.
This is the fourth consecutive month when headline inflation has remained below the Reserve Bank of India (RBI) midpoint of 4%. Food inflation, a significant contributor to the Consumer Price Index, has also remained below 3% for three consecutive months. Let us know in detail what this decline means, what impact it will have on your kitchen, and how much of a relief it is for the RBI.
Historic decline in inflation rate
This is the lowest year-on-year inflation since February 2019, which can be considered a fantastic achievement for the economy. Last October, the CPI reached a 14-month high of 6.21%, causing great trouble to the common people.
Decline in food inflation
An unprecedented decline has also been seen in food inflation. It has fallen from 1.78% month-on-month to 0.99% in May. The cheapening of food items directly affects the budget of every household, which will provide great relief to the general public.
RBI’s forecast also changed
In its Monetary Policy Review on June 6, the RBI reduced its inflation forecast for FY 2026 from the earlier 4% to 3.7%. This shows that the RBI also sees inflation pressure easing in the future, which is a positive message for both the market and consumers.
Inflation decreased in both rural and urban areas
According to government data, this decline in inflation has been seen in both rural and urban areas, making it clear that its impact is widespread:
Rural inflation has come down to 2.59% in May 2025 from 2.92% (April).
While urban inflation has come down from 3.36% month-on-month to 3.07%.
Big decline in vegetables and pulses too
Vegetable inflation has also seen a big decline in May, falling from -10.98% to -13.70% month-on-month. The cheapness of vegetables directly affects daily life.
Pulses inflation has also come down from -5.23% to -8.22% in May. This is a notable relief for families who depend on pulses for protein.
Core CPI and housing inflation
However, during this period, the core CPI (core consumer price index, which does not include food and fuel) has increased from 4.1% to 4.2% month-on-month. This shows that there is still some pressure in some other sectors of the economy. However, this increase is marginal.
On the other hand, housing inflation has increased from 3% (April) to 3.16% in May. This is also a small jump, which will need to be monitored in the future.