Overview

• Retail inflation eased to 2.82% in May 2025, marking the softest pace since February 2019
• Food inflation fell to 0.99% in May, propelled by a 13.7% year-on-year plunge in vegetable prices and declines in pulses, while cereal price increases slowed
• Core inflation softened to 4.28% from 4.36% in April, further expanding the central bank’s policy flexibility
• The RBI cut its FY2025-26 inflation target to 3.7% from 4.0% and signaled additional rate cuts after a brief pause
• Improved agricultural output and easing global crude oil prices underpinned the moderation in overall consumer prices