Retail inflation rate slipped to a 69-month or near six-year low of 3.16 per cent in April, primarily due to moderation in prices of food items including vegetables, pulses, cereals, meat and fish, data released by the National Statistics Office (NSO) showed. This marked the sixth month of a downward trajectory in retail inflation, the lowest inflation level after July 2019 and the third successive month of inflation rate remaining below the Reserve Bank of India’s band of 4+/- 2 per cent for medium-term inflation targeting.
Food , based on the Consumer Food Price Index (CFPI), moderated for the sixth consecutive month, easing to a 42-month low of 1.78 per cent in April from 2.69 per cent a month ago and 8.7 per cent in April 2024. Vegetables recorded a deflation of 10.98 per cent in April, the sharpest pace of decline since February 2023, while pulses also recorded a deflation of 5.23 per cent in April as against a deflation of 2.73 per cent in the previous month, marking the fastest fall in prices over six years.
The meat and fish segment registered a fall in prices to (-) 0.35 per cent after a gap of 22 months in April 2025, while the cereals inflation slipped to a 35-month low of 5.3 per cent due to better kharif output. “The easing of food inflation would help in bringing relief to households and the consumption demand as we begin the new fiscal,” Paras Jasrai, Associate Director, India Ratings and Research said.
Going ahead, a favourable monsoon should help keep inflation in control, raising expectations of a rate cut by the RBi in the upcoming June monetary policy review meeting. “A record rabi harvest and robust pulses output indicated by the Union Ministry of Agriculture’s Second Advance Estimates, and the forecast of a favourable monsoon for the upcoming kharif season should keep food inflation in check this fiscal. Given the current inflation trajectory, a further 25-basis point rate cut is expected in the Reserve Bank of India’s monetary policy review in June,” a CRISIL report said.
While the overall inflation in FY26 is seen below 4 per cent, the cumulative rate cut in FY26 would depend on the pace of decline in inflation and evolving inflation-growth dynamics, economists said.
The decline in retail inflation was sharper in rural areas than urban areas, which is expected to increase the recovering rural demand. Rural retail inflation was recorded at 2.92 per cent in April as against 3.25 per cent in March, while urban inflation declined to 3.36 per cent in April from 3.43 per cent in March. Food inflation in rural areas eased to 1.85 per cent in April from 2.82 per cent in March, while that in urban areas moderated to 1.64 per cent in April from 2.48 per cent in March.
The declining trend, however, was not uniform as fuel and light and core inflation saw an uptick. Fuel and light inflation rate rose to 2.92 per cent in April from 1.48 per cent in the previous month.
Core inflation — the non-food, non-fuel segment of inflation — remained firm at 4.1 per cent in April, the highest level since November 2023, indicating signs of demand being steady, Jasrai said. Retail inflation (excluding vegetables and pulses) shot up to an 18-month high of 4.4 per cent in April, he said.
Some economists differed on the view that the lower inflation print will lead to a rate cut, saying that while the headline inflation print is within RBI’s forecast for Q1, it will take note of the fact that the decline is mainly due to lower food prices. “While 3.2% is within RBI’s forecast of 3.6% for Q1, the central bank will be cognizant of the fact that the number has come down mainly due to vegetables which have a weight of 6 per cent in the index. Excluding this component keeps inflation at the target rate. Therefore, this factor will be kept in mind. It does look like that this number may not trigger a rate cut given that there would be time to evaluate both the monsoon and tariff issues before taking a final call in August. Inflation would likely be low in May and June too due to the base effect,” Madan Sabnavis, Chief Economist, Bank of Baroda said.
