Retail inflation dropped to a nearly six-year low of 3.16 per cent in April, driven by subdued prices of vegetables, fruits, pulses and other protein-rich foods.
This significant easing from 3.34 per cent in March and 4.83 per cent in April 2024 opens the door for the Reserve Bank of India to consider another interest rate cut in its upcoming June monetary policy review. The last time inflation was this low was in July 2019, when it stood at 3.15 per cent.
Data from the National Statistics Office shows a sharp decline of 91 basis points in food inflation in April in comparison with March. Food inflation during the month at 1.78 per cent was also the lowest since October 2021. Within food, there was a decline in inflation in potato (12.7 per cent), tomato (33.21 per cent), chicken (6.78 per cent), arhar (14.27 per cent), and jeera (20.79 per cent) during April on an annual basis.
“The significant decline in headline inflation and food inflation during the month of April 2025 is mainly attributed to a decline in the inflation of vegetables, pulses and products, fruits, meat and fish, personal care and effects and cereals and products,” NSO said.
The RBI, which has been mandated to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side, has slashed the key interest rate by 50 basis points in two tranches (February and April) as the price situation improved.
Rural inflation was at 2.92 per cent in April compared with 3.25 per cent in the preceding month of 2025. Urban inflation declined marginally from 3.43 per cent in March to 3.36 per cent in April.
Among the states, highest inflation was in Kerala at 5.94 per cent, while the lowest was in Telangana at 1.26 per cent. In Bengal, retail inflation was at 3.16 per cent in April.
“The record rabi harvest and robust pulses output, as indicated by the second Advance estimates, combined with the forecast of a favourable monsoon for the upcoming kharif season should keep food inflation in check. But it’s important to remember that agricultural performance hinges not just on the volume of rainfall but also on its temporal and spatial distribution,” said Dharmakirti Joshi, chief economist, Crisil Limited.
Climate change is disrupting monsoons, causing more extreme rainfall and dry spells, while rising heatwaves threaten crop yields and food inflation, said Joshi, adding that the evolving conditions need to be monitored.
The soft April inflation, likely sub-4 per cent print in May, falling crude prices, and forecast of a strong monsoon with early onset in Kerala
give the MPC room to prioritise growth over inflation in the June 2025 meeting, said Aditi Nayar, chief economist, Icra.
Nayar said that CPI inflation is expected to average 3.5 per cent in FY26, with Q2 and Q3 prints well below MPC’s projections, creating room for 75 bps of rate cuts this year.