India’s CPI Retail Inflation Falls to 1.55% in July – Lowest Since June 2017

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12 Aug, 2025

India’s CPI Retail Inflation Falls to 1.55% in July – Lowest Since June 2017

India’s retail inflation, measured by the Consumer Price Index (CPI), dropped sharply to 1.55% in July 2025, marking its lowest level since June 2017. This decline reflects easing price pressures across major categories, offering relief to consumers and policymakers alike.

Key Highlights

CPI Inflation Rate: 1.55% in July 2025
Previous Month (June 2025): 2.21%
Lowest Since: June 2017
Main Drivers: Lower food prices, steady fuel rates, and base effect

Reasons for the Decline

Food Inflation Cooling Down: Prices of vegetables, cereals, and edible oils eased due to better supply and seasonal trends.
Stable Fuel Costs: Global crude oil prices remained range-bound, reducing pressure on domestic fuel prices.
Base Effect: High inflation last year during the same period made this year’s percentage change appear lower.

Impact on the Indian Economy

Consumers: Increased purchasing power as essential goods become relatively cheaper.
RBI’s Monetary Policy: Low inflation may give the Reserve Bank of India more room to maintain or cut interest rates to support growth.
Overall Growth: Encouraging sign for economic stability, especially in a high-growth phase.

Impact on the Indian Stock Market

The sharp fall in retail inflation can influence stock market sentiment in multiple ways:

1. Positive for Interest Rate–Sensitive Sectors

Banking, real estate, and automobile sectors benefit if the RBI adopts a dovish stance and lowers borrowing costs.
Lower EMIs can boost demand for housing and vehicles.

2 Boost for Equity Valuations

Low inflation often means stable input costs for companies, which can support corporate profit margins.
Investors may price in stronger earnings growth, supporting higher market valuations.

3 FII & DII Flows

Foreign Institutional Investors (FIIs) may see India as a stable, low-inflation growth market, attracting fresh inflows.
Domestic institutional investors (DIIs) may continue to deploy more funds in equities amid optimism.

4 Bond Market Effect

Bond yields may soften due to lower inflation expectations, making equities relatively more attractive.
This can shift funds from debt to equity markets.

5 Cautionary Note

Extremely low inflation could signal weak demand in certain segments, which may affect revenue growth for consumer-facing companies.
Markets will also watch global crude oil prices, monsoon progress, and upcoming RBI commentary for future trends.

Looking Ahead

While July’s data is encouraging, inflation trends can change with seasonal fluctuations in food prices, global crude oil volatility, and currency movements. Continuous monitoring is essential for sustainable price stability.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1. What is CPI retail inflation?

CPI retail inflation measures the average change in prices paid by consumers for a basket of goods and services over time. It reflects cost-of-living changes for households.

Q2. Why did inflation fall to 1.55% in July 2025?

The drop was due to easing food prices, stable fuel rates, and a statistical base effect from higher prices last year.

Q3. How does low inflation affect the economy?

Low inflation boosts purchasing power, may encourage consumption, and can allow the central bank to keep interest rates lower to support growth.

Q4. How does low inflation impact the stock market?

It can lift equity sentiment, boost valuations, attract foreign investment, and benefit rate-sensitive sectors like banking, auto, and real estate. However, if it signals weak demand, it may weigh on some consumer companies.

Q5. Is low inflation always good?

Not always. Extremely low inflation or deflation can signal weak demand in the economy, which may hurt growth and employment.

Q6. How often is CPI inflation data released?

The CPI inflation figures are released every month by the Ministry of Statistics and Programme Implementation (MoSPI).