Retail inflation hits six-year low of 2.10% in June

India’s retail inflation eased to a six-year low of 2.1% in June, aided by an easing of food price rises and favourable base effects, government data released on Monday showed. This marks the fifth consecutive month that inflation has stayed below the Reserve Bank of India’s (RBI) medium-term target of 4% and the eighth straight month it has remained under the central bank’s upper tolerance band of 6%.

June also marked the second month in a row with inflation below 3%. Retail inflation was down from 2.82% in May and 5.08% in June 2024.

A Reuters poll of 50 economists had forecast retail inflation in June to ease to 2.50%.

The data comes a month after the RBI’s Monetary Policy Committee (MPC) cut the benchmark repo rate by 50 basis points to 5.5%, the third consecutive cut this year. The policy stance was shifted to “neutral” to indicate a more balanced approach to growth and inflation going forward.

RBI’s inflation outlook

For FY26, the central bank revised its CPI inflation forecast down to 3.70%, from the earlier projection of 4% made in April. The quarter-wise breakdown now stands at: Q1: 2.9%, Q2: 3.4%, Q3: 3.5%, Q4: 4.4%.The MPC observed that while inflation has softened considerably since breaching the tolerance band in late 2024, global uncertainties and supply-side risks continue to warrant close monitoring. Nonetheless, the RBI had said the inflation outlook is “evenly balanced” and projected further easing in price pressures in the coming months.“Inflation has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of broad-based moderation,” RBI Governor Sanjay Malhotra said in his post-policy address.

(More to come)