New Delhi, Jan 29 (NationPress) India has achieved its lowest inflation rate since the commencement of the CPI series, recording an average headline inflation of 1.7 percent from April to December 2025, alongside a strong GDP growth of 8 percent, as detailed in the Economic Survey 2025-26 presented in Parliament on Thursday.

The survey credits the reduction in retail inflation mainly to the general disinflationary trend observed in food and fuel prices, which together constitute 52.7 percent of India’s Consumer Price Index (CPI) basket.

In the last four years, the average retail inflation measured by CPI has shown a consistent downward trend, decreasing from 6.7 percent in 2022–23.

This disinflation is predominantly due to food items, aided by favorable weather and increased production that enhanced supply. Conversely, core inflation, excluding volatile sectors such as food and fuel, remained fairly stable with a slight increase during this timeframe.

The rise in average core inflation is significantly influenced by substantial gains in the prices of precious metals, such as gold and silver, which have reached historic highs amid increased global uncertainty and strong demand for safe-haven assets. When these volatile components are excluded, core inflation reflects a declining trend, aligning with the overall moderation in headline inflation, as noted in the survey.

Over the past two years, inflation has been gradually declining in sectors like clothing and footwear, housing, and healthcare, while showing fluctuations in transport and communication. This disinflation is indicative of easing input costs, improved supply conditions, and competitive pressures in markets where prices adjust more frequently.

The survey highlights that among major Emerging Markets & Developing Economies (EMDEs), India has reported one of the most significant drops in headline inflation in 2025, approximately 1.8 percentage points. Notably, this disinflation has occurred alongside robust GDP growth of 8 percent in the first half of FY 2026, reflecting India's strong macroeconomic fundamentals and its capacity to maintain growth while effectively managing price pressures.

In conjunction with upgrading India's sovereign rating, global rating agencies have recognized the credibility and efficacy of India's inflation management. S&P noted that "Monetary policy reform to switch to inflation targeting has yielded positive results. Inflationary expectations are now better anchored than they were a decade ago."

Between 2008 and 2014, India experienced double-digit inflation on several occasions. Over the last three years, despite fluctuations in global energy prices and supply-side disruptions, CPI growth averaged 5.5 percent. In recent months, it remained within the lower range of the Reserve Bank of India's (RBI) target of 2-6 percent. These developments, coupled with a robust domestic capital market, create a more stable and supportive environment for monetary policy, as stated in the survey.

This year, the world has observed a widespread and sustained reduction in inflation across advanced, emerging, and developing economies. Global headline inflation has decreased from a peak of 8.7 percent in 2022 to 4.2 percent in 2025.