India's CPI Inflation Falls to 2.82% in May, Lowest Since February 2019

India’s headline retail inflation eased to 2.82% year-on-year in May 2025, according to data from the Ministry of Statistics and Programme Implementation. This is the lowest inflation reading since February 2019 and came in below market expectations of 3%. In comparison, CPI inflation was 3.16% in April 2025 and 4.80% in May 2024.

The fall was driven largely by food prices. Food inflation dropped to 0.99% in May from 1.78% in April. A decline in prices of fruits, pulses, and cereals helped bring down the overall food inflation. Month-on-month, fruit prices fell 2%, pulses declined by 1.7%, and cereals dropped 0.6%. Vegetable prices also remained sharply lower on an annual basis, declining by 13.7%.

Core inflation, which excludes food and fuel, rose marginally to an estimated 4.2%, indicating steady underlying demand.

According to Dipti Deshpande, Principal Economist at Crisil, a strong rabi harvest—supported by record wheat production—and a forecast of above-normal monsoon rainfall by the India Meteorological Department should help contain food inflation this fiscal year, barring significant weather disruptions. While June rainfall has been below average so far, the key monsoon months of July and August will be decisive for kharif crop outcomes.

Deshpande further noted that international crude oil prices are expected to remain in a lower range of $65–70 per barrel in 2025, aiding in the moderation of non-food inflation. Based on current trends, she projects headline inflation to average around 4% in 2025-26,  and the RBI may consider further easing. The central bank has already cut the repo rate by 100 basis points in 2025, bringing it to 5.50%.