Retail Inflation Plunges: Relief or trouble for the common man, what are these figures telling?

Retail Inflation Plunges: There is news of relief for the common man as the retail inflation rate has come down to an 8-year low of 1.55% in July. What did not happen in the last 8 years has happened. Retail inflation has come down to an 8-year low in July. This is revealed by the latest data of the Ministry of Statistics and Program Implementation (MoSPI). It released the retail inflation figures on Tuesday. Retail inflation based on the Consumer Price Index (CPI) has come down to 1.55% in July. The retail inflation rate was 2.1% in June. The latest decline was mainly due to a huge reduction in food inflation. This was possible due to good harvest and efforts by the government to improve supply.

Relief for the common man as the retail inflation rate below

This decline is mainly due to a decrease in the prices of food items, in which the fall in the prices of vegetables has contributed a lot.

The Reserve Bank of India (RBI) has reduced the inflation forecast for the full year from 3.7% to 3.1% in its monetary policy review on August 6. The RBI's Monetary Policy Committee (MPC) said that the more than expected decline in inflation was mainly due to changes in the prices of food items, especially vegetables.

Food inflation below zero in July

While the Consumer Food Price Index (CFPI) rate fell further to 1.76% below zero in July. It was -1.01% in June. This is the lowest since January 2019. The decline of 0.75% from June was mainly due to the reduction in the prices of pulses, vegetables, cereals, eggs, sugar and some services like transport, communication and education. Along with this, last year's prices also had an impact on it.

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Retail inflation in rural areas was 1.18% in July, which was 1.72% in June. Rural food inflation decreased from -0.87% to -1.74%. Even though inflation in urban sector was 2.05% in July 2025. It was 2.56% in June. Urban food inflation fell further from -1.17% to -1.90%

Housing inflation in urban areas remained stable at 3.17% in July. Whereas it was 3.18% in June. Meanwhile inflation in education sector (both rural and urban area) decreased to 4%. Health inflation increased from 4.38% to 4.57% in July.

Improvement in crop and supply contributed significantly

This decline in retail and food inflation is the result of the impact of last year's prices and the widespread reduction in the prices of food items and some services. RBI has said, 'The fall in inflation is mainly due to the fall in vegetable prices.' This means that the fall in vegetable prices has proved to be the biggest factor in the fall in inflation.

Summary

Let's understand this with another example. Suppose, last year potato was 20 rupees per kg. Whereas, this year it is 10 rupees per kg. In this way, the inflation rate will be -50%. This means that potato has become cheaper. The government has said that inflation has come down due to good harvest and improvement in supply.

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