Retail inflation in India eases to 3.16% in April, driven by falling food costs

Retail inflation in India dropped to a six-year low of 3.16% in April, down from 3.34% in March, mainly due to a continued decline in food prices.

This marks the third consecutive month that inflation has remained below the Reserve Bank of India’s medium-term target of 4%.

A survey conducted, projected inflation to ease to 3.27% in April.

The wholesale price inflation fell sharply to 1.76% in April 2025, down from 2.05% in March and 1.19% in the same month last year, according to data released by the Ministry of Commerce and Industry on May 14.

The ministry said, “Positive rate of inflation in April, 2025 is primarily due to an increase in prices of manufacture of food products, other manufacturing, chemicals and chemical products, manufacture of other transport equipment and manufacture of machinery and equipment, etc.”

Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, slowed to 1.78% last month from 2.69% in March.

A strong harvest helped contain price pressures, despite intense summer heatwaves, bringing relief to households that spend a large portion of their income on food.

Rural inflation declined to 2.92% in April from 3.25% in March, while urban inflation eased to 3.36% compared to 3.43% a month earlier.

CPI inflation was 3.34% in March and 4.83% in April 2024. For comparison, it stood at 3.15% in July 2019.

"Inflation inched down to 3.16% in April on the back of a continuous broad-based drop in food prices, including vegetables, cereals, and pulses. The CPI print today sets the stage for another rate cut by the RBI (Reserve Bank of India) in its June meeting of 25 basis points," said Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram.

Vegetable prices dropped 11% year-on-year in April, following a 7.04% decline in March. Cereal prices rose 5.35%, moderating from a 5.93% increase the previous month. Pulse prices fell 5.23%, compared to a 2.73% drop earlier.

Expectations of an above-average monsoon have raised hopes of stronger agricultural output and a boost in rural demand in the coming months.

Wholesale price index-based inflation is estimated to have slowed to 1.76% in April from 2.05% in March.

With inflation remaining low, the RBI has more room to cut interest rates to support an economy showing signs of deceleration.

RBI Governor Sanjay Malhotra, during last month’s Monetary Policy Committee meeting, said inflation has been on a downward path, supported by favorable trends in food prices.

He added that inflation is likely to ease further in FY26, potentially easing cost burdens on households.

However, the central bank remains watchful of global uncertainties that could impact domestic price stability.

For FY 2025-26, the RBI has projected CPI inflation at 4%, with estimates of 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4.