Will the Softening of Inflation Significantly Benefit Households and Businesses?
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Synopsis
The recent decline in CPI inflation is expected to provide much-needed relief to households and businesses alike, fostering optimism in consumer and industry sentiments. With a notable reduction in food prices, the outlook for economic growth remains promising.
Key Takeaways
- Current CPI inflation rate: 2.82 percent.
- Food inflation: 0.99 percent (provisional).
- Significant price drops: Notable decreases in various food items.
- Economic outlook: Positive growth anticipated due to reduced inflation.
- Stability in crude oil prices: Expected to remain between $60-$65 per barrel.
New Delhi, June 12 (NationPress) The decline in CPI inflation is set to significantly benefit both households and businesses, according to the industry body PHDCCI. The retail inflation rate for May has decreased to 2.82 percent, reflecting a substantial drop of 34 basis points from April's rate of 3.16 percent.
“This marks the lowest year-on-year inflation since February 2019, which positively influences consumer and industry confidence,” remarked Hemant Jain, President of PHDCCI.
The year-on-year inflation rate, based on the All-India Consumer Food Price Index (CFPI) for May, stands at 0.99 percent (provisional), the lowest since October 2021.
“This decrease in headline and food inflation during May 2025 is mainly due to falling prices of pulses, vegetables, fruits, cereals, household goods, services, sugar, and eggs,” Jain added.
Both CPI and food inflation have notably decreased in rural and urban areas. In the rural segment, the headline inflation for May was 2.59 percent (provisional), down from 2.92 percent in April, while food inflation was recorded at 0.95 percent (provisional) in May, a decrease from 1.85 percent in April.
“Looking forward, we anticipate a further reduction in food inflation, thanks to the expected good monsoon. Additionally, crude oil prices are predicted to stabilize between $60-$65 per barrel in the near to medium term, which will significantly enhance private consumption and drive higher economic growth,” Jain stated.
While this indicates a structural affirmation of India’s food-price stability, the current soft CPI phase may have reached its cyclical low, noted Arsh Mogre, Economist Institutional Equities at PL Capital.
“The next challenge is to see how long this sub-4 percent range can be maintained before factors like base normalization, kharif shocks, or geopolitical events influence the inflation trajectory,” he added.
Point of View
This decline in inflation signals a positive shift in the economic landscape. It reflects the resilience of India's food pricing and indicates a potential for improved consumer spending, which is vital for sustaining economic growth. As national editor in chief, we stand committed to delivering insights that matter to our audience.
NationPress
13/06/2025
Frequently Asked Questions
What is the current CPI inflation rate in India?
As of May, the CPI inflation rate stands at 2.82 percent, a significant drop from the previous month.
How does this inflation drop affect consumers?
The reduction in inflation is expected to enhance consumer purchasing power and boost overall economic sentiment.
What factors contributed to the decline in food inflation?
The decline in prices of various food items including pulses, vegetables, and cereals contributed to the decrease in food inflation.
What is the outlook for inflation going forward?
Experts predict that food inflation may continue to decrease, aided by favorable monsoon conditions and stable crude oil prices.
Is this the lowest inflation rate recorded?
Yes, this is the lowest year-on-year inflation rate recorded since February 2019.
