India’s CPI inflation decelerated to a 77-month low of 2.10% YoY in Jun-25 from 2.82% in May-25.
Download ReportQuantEco Research | Jun-25 CPI - Food in deep freezer
India’s CPI inflation decelerated to a 77-month low of 2.10% YoY in Jun-25 from 2.82% in May-25. This marks the eighth back-to-back downside surprise in the CPI data release and the fifth consecutive instance of undershooting the 4% target. The food disinflation momentum continues to surprise amidst good overall progress of the south-west monsoon season and a restrained MSP hike for kharif crops. Considering the downside surprise and high frequency signals, we revise lower our FY26 average CPI inflation forecast to 3.0% from 3.5% earlier – if realized, this would be the lowest level of retail inflation since India’s 1991 economic liberalization. Although firmness in core inflation and global risks warrant caution, the magnitude of downward revision to headline inflation has created space for incremental monetary accommodation. With growth remaining below potential/aspirations, the MPC could lean towards a 25 bps rate cut in Aug-25/Oct-25 policy review to further fast track policy transmission.