India’s benchmark inflation measure fell for the seventh consecutive month in April to reach 3.16%, the lowest since July 2019, brightening the prospects of another rate cut in the June meeting of RBI’s Monetary Policy Committee (MPC), a move that could generate potential tailwinds for economic growth.
The Consumer Price Index (CPI) rose at 3.16% in April 2025 compared to 3.34% in March according to data released by the National Statistical Office (NSO) on Tuesday. The ongoing moderation in inflation is the result of a sharp fall in food inflation, especially vegetables. The food component of CPI, according to the NSO press release has fallen every month to reach 1.8% in April from a value of 10.9% in October 2024, bringing the headline inflation number from 6.21% to 3.16% during this period. To be sure, the momentum of the fall seems to have moderated in the past couple of months. The April inflation print of 3.16% is in line with the projection by a Bloomberg poll of economists.
Vegetables continue to be the driving force behind falling food inflation with an annual contraction of 11% in April . Pulses and Spices also saw a fall in prices in April in year-on-year terms. Edible oil and fruits categories, on the other hand, saw a double-digit inflation.
“Government procurement of wheat has already crossed 29 million tonne (the highest since 2021-2022 season), thanks to a good winter crop. The weather office is forecasting that monsoon rains will hit Kerala on May 27, five days earlier than usual. The expectations of an early arrival of south-west monsoon also augurs well for summer crops like paddy, maize, soybean and some oilseeds,” said Aayushi Chaudhary, Pranjul Bhandari and Priya Mehrishi, economists at HSBC India.
Among other categories in the CPI basket, a discernible increase in inflation was only seen in the fuel and light category which went up from 1.4% in March to 2.9% in April. While the trend is a bit counter-intuitive given the fact that cost of India’s crude oil basket fell from $72.5 per barrel in March to $67.7 per barrel in April, it needs to be remembered that the government imposed an additional excise duty of ₹2 on petrol and diesel from April 7 after crude prices fell following Donald Trump’s announcement of reciprocal tariffs. While crude prices have reversed their falling trajectory in the last couple of days, India’s crude oil basket price was still $63.8 per barrel on May 9, the latest period for which data is available with the petroleum ministry. Inflation was largely flat for other major sub-categories of CPI, with the miscellaneous category (it mainly records consumable services) showing the highest inflation of 5%.
Core inflation – it measures the non-food non-fuel part of the CPI basket and is more immune from seasonal fluctuations – was flat at 4.1% in April, the same as its March print according to the CMIE database. While core inflation has climbed in the last three months, analysts have attributed this to the rise in gold-silver prices because of the ongoing volatility in financial markets.
“Core inflation (excluding fuel and food), although inching up to 4.1 per cent in February 2025 from 3.6 per cent in January, continues to be around the 4 per cent mark, suggesting that underlying inflationary impulses in the economy are benign and well anchored. CPI inflation excluding food, fuel, gold and silver was still at a muted 3.2 per cent in February 2025. Fuel group continues to be in deflation”, RBI governor Sanjay Malhotra said in the minutes for the April MPC meeting which had access to inflation data till February 2025.
In its April resolution, the MPC has projected 4% inflation for the fiscal year 2025-26 – exactly in line with RBI’s target – with the quarterly numbers being 3.6%, 3.9%, 3.8% and 4.4% respectively.
“On the energy front, Brent crude prices are projected to remain subdued, averaging around $65 per barrel in the current fiscal year, which should help contain non-food inflation. Core inflation inched up 10 basis points to 4.2% in April but remained below its trend level (measured by the decadal average). Given the current inflation trajectory, a further 25-basis point rate cut is expected in the June monetary policy,” said Dharmakirti Joshi, chief economist at Crisil Limited.