India’s retail inflation is expected to have fallen to a more-than-six-year low in June, giving the Reserve Bank of India (RBI) greater flexibility to ease monetary policy in the coming months. According to a Reuters poll of 50 economists conducted between July 7 and 10, the Consumer Price Index (CPI) is forecast to have declined to 2.50% in June, down from 2.82% in May. If confirmed when the official data is released on July 14, this would mark the lowest inflation level since early 2018.
The cooling of inflation is attributed mainly to stable food prices and a favorable base effect. Last year, vegetable prices had surged around 30 percent in June, resulting in a high comparison base for this year. Additionally, strong supplies from recent harvests, especially of cereals like wheat and rice, have contributed to keeping prices in check.
Economists noted that while food inflation continues to ease, core inflation — which excludes food and fuel — is expected to rise slightly to around 4.3 percent, indicating resilient domestic demand. Meanwhile, Wholesale Price Index (WPI) inflation is projected to have increased to 0.52 percent in June from 0.39 percent in May.
The easing inflation trend follows a surprise 50 basis points repo rate cut by the RBI in June. The central bank also shifted to a neutral policy stance, signaling more room to support growth through further rate cuts if inflation remains subdued. Analysts believe that sustained low inflation could pave the way for additional policy easing, although future decisions will depend on food supply dynamics and possible external shocks.
The poll results show inflation projections ranging between 1.8 percent and 3.5 percent, underlining the uncertainty linked to weather patterns and supply factors. With the monsoon season underway, the outlook for food prices in the coming months remains a key variable.
India’s economy has been growing steadily, with GDP expanding by an estimated 7.4 percent in the first quarter of the financial year. However, economists have warned that rising household debt and potential volatility in global markets could pose challenges to sustained consumption growth.
The official CPI data for June will be released on July 14 at 10:30 GMT. This will offer more clarity on the inflation trajectory and help guide the RBI’s policy decisions in the upcoming monetary policy review scheduled for the end of July.