India’s retail inflation, based on the Consumer Price Index (CPI), for May stood at 2.82 per cent, down from 3.16 per cent in April, data released by the Ministry of Statistics & Programme Implementation showed on Thursday. This is down 34 basis points in comparison to April 2025. It is the lowest year-on-year inflation after February, 2019. CPI inflation in October had reached a 14-month high of 6.21 per cent. The fall was sharper than expected, with the CNBC-TV18 poll pegging May inflation at 2.95 per cent.
The YoY inflation rate based on All India Consumer Food Price Index (CFPI) for the month of May 2025 over May 2024 is 0.99 per cent (provisional). Corresponding inflation rate for rural areas stood at 0.95 per cent and urban inflation at 0.96 per cent, the NSO data showed. May witnessed a sharp decline of 79 basis points in food inflation in comparison to April 2025. The food inflation in May 2025 is the lowest after October 2021.
A significant decline in headline and food inflation during the month of May 2025 is mainly attributed to decline in inflation of pulses & products, vegetables, fruits, cereals & products, households goods & services, sugar & confectionery and egg and the favourable base effect.
The headline and food inflation in the rural sector during the month in review came in at 2.59 per cent (provisional) while the same was 2.92 per cent in April 2025. Urban inflation declined from 3.36 per cent in April 2025 to 3.07 per cent (Provisional) in May 2025. However, sharp decline is observed in food inflation from 1.64 per cent in April 2025 to 0.96 per cent in May 2025.
Vegetable inflation dropped to -13.70 per cent in May from -10.98 per cent in April, pulses and products inflation stood at -8.22 as against -5.23 per cent in April. While Cereals and Products inflation came in at 4.77 per cent, milk and products inflation stood at 3.15 per cent. Fuel and light inflation came in at 2.78 per cent.
According to the NSO data, housing inflation came in at 3.16 per cent in May from 3.00 per cent in April, while clothing and footwear inflation remained flat at 2.67 per cent in May. Inflation for health was at 4.34 per cent in May and education inflation came in at 4.12 per cent.
Reacting to this, Radhika Rao, Executive Director and Senior Economist at DBS Bank, said, “India’s inflation came in close to our expectations in May, below 3 per cent—the softest since mid-2019. Selected perishable food groups were up modestly on a sequential basis but moderated on annual terms, aiding the headline. Benign core-core prints point to economic slack, supporting recent moves to frontload monetary and liquidity stimulus. Monsoon developments warrant attention, after progress stalled following an early onset. For the full year, we expect inflation to average below 4 per cent, aligning with our core-core measures.”