Watch Free Classes
UPSC » Daily News Analysis ‘Retail inflation eases to six-year low’ : 13 June

Daily News Analysis ‘Retail inflation eases to six-year low’ : 13 June

Table of Content

India’s Retail Inflation:

  • Headline Inflation:
    • Eased to 2.8% in May 2025 (75-month low)
    • Lowest since February 2019
  • 2025-26 Average (Apr-May):
    • 2.99% average inflation — lowest for first two months of a financial year since 2017-18
  • Food & Beverages Inflation:
    • Dropped to 1.5% in May from 2.1% in April
    • 7th consecutive month of moderation
  • Key Drivers:
    • Deflation in:
      • Vegetables: -13.7%
      • Pulses: -8.2%
      • Spices: -2.8%
      • Meat: -0.4%
    • Offset by:
      • Double-digit inflation in edible oils and fruits
  • Core Inflation:
    • Edged up to 4.2% (excludes food & fuel)
    • Indicates steady underlying demand conditions
  • Concerns:
    • Persistent rise in edible oil prices due to:
      • Lower oilseed sowing
      • Rising global prices
      • High import dependence
    • Govt reduced basic customs duty on crude edible oils from 20% to 10% for relief
  • Policy Outlook:
    • RBI likely to pause further rate cuts
    • Future actions to be data-dependent

Headline Inflation:

  • Measures the total inflation in an economy, reflecting the overall increase in prices of a basket of goods and services.
  • Calculated using indices like the Consumer Price Index (CPI).
  • Includes all components — food, fuel, housing, clothing, etc.
  • Highly influenced by volatile items like food and fuel prices.

Core Inflation:

    • Measures underlying, long-term inflation trends by excluding volatile items such as food and fuel.
    • Helps gauge persistent demand-side pressures in the economy.
  • Considered a better indicator for monetary policy decisions since it reflects stable price movements.
Why in News? A Fall in prices of fruits, pulses, and cereals helped lower India’s headline retail inflation rate to a 75-month low of 2.82 percent in May 2025, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).