Big relief for common people... Inflation reached its lowest level in 8 years, falling below 2% in July

Business News: There is relief news for consumers on the inflation front. According to government data, India's retail inflation fell to 1.55% in July 2025, which is the lowest level in the last 8 years. This decline was recorded due to a sharp decline in food prices and a favorable base effect. This is the lowest year-on-year inflation rate since June 2017, when it was 1.46%.

This is the first time in the last 6 years that inflation has fallen below the Reserve Bank of India's (RBI) tolerance band of 2% to 6%. Retail inflation was 2.1% in June and 3.6% in July 2024.

Reasons for decrease in inflation in NSO report

The National Statistical Office (NSO) said that the main reason for the decline in overall (headline) inflation and food inflation in July 2025 was the favorable comparative base effect and softening of prices of pulses, transport and communication, vegetables, cereals, education, eggs, and sugar and confectionery products.

The inflation rate of food items in July was -1.76% on an annual basis, which is the lowest since January 2019. It was -1.01% in June. Vegetable prices became cheaper by 20.69% and pulses and their products by 13.76% compared to a year ago. Spices fell by 3.07%, while the price of meat and fish fell by 0.61%.

Mixed Trends In Commodity Prices

The latest data reveals a mixed trend in prices across essential commodities and services. Among food items, cereals saw a drop of 3.03%, while eggs declined by 2.26% and milk along with dairy products fell by 2.74%. Sugar and confectionery items also recorded a decrease of 3.28%. On the other hand, prices of fruits surged sharply by 14.42%, and oil and fat products witnessed an even steeper rise of 19.24%.

Beyond food, fuel and power costs went down by 2.67%, providing some relief to consumers. However, non-food sectors like health services saw a 4.57% increase, while education expenses rose by 4%, indicating a steady upward trend in essential service costs.

Economists' estimates and RBI's stance

A Reuters survey of 50 economists had estimated July retail inflation at 1.76%. These figures come a week after the RBI's Monetary Policy Committee (MPC) maintained rates at 5.50% and called the inflation forecast 'more favorable.' Since February, interest rates have been cut by a total of 100 basis points three times in a row, while the committee has maintained its neutral stance.