India's Inflation Lowest Since July 2019, To 3.16%; Will RBI Cut Repo Rate By 25 Bps Or 50 Bps Next Month?

CPI Inflation: India's consumer price index (CPI) inflation touched its lowest level since July 2019, to a staggering 3.16% for April 2025. CPI is now below RBI's lowest target of 4% for third consecutive month. Experts are predicting are probability of 25 basis points rate cut.

In April 2025, food inflation eased to 1.78% in April 2025, marking its lowest level since October 2021.

The sharper-than-expected cooling in CPI inflation is due to a decline in inflation of Vegetables, Pulses & Products, Fruits, Meat and fish, Personal care and effects and Cereals and Products.

"The benign April 2025 headline inflation print, expectations of another sub-4% print in May 2025, the dip in crude oil prices in the recent weeks, and the IMD's forecast of an above-normal monsoon in 2025, as well as an early onset in Kerala, will allow the MPC to continue to place a higher weight on growth vis-à-vis inflation, when it meets in June 2025," Aditi Nayar, Chief Economist & Head-Research & Outreach at ICRA said.

During April month, a significant decline in headline and food inflation in the rural sector is observed to 2.92% (provisional), compared to 3.25% in March 2025. The CFPI-based food inflation in the rural sector is observed as 1.85% in April 2025 in comparison to 2.82% in March 2025.

Furthermore, a sharp decline is recorded in urban inflation from 3.43% in March 2025 to 3.36% (Provisional) in April 2025. However, a sharp decline is observed in food inflation from 2.48% in March 2025 to 1.64% in April 2025.

Will RBI Cut Repo Rate In June 2025 policy?

ICRA's economy predicts CPI inflation to average 3.5% in FY2026, with the prints for Q2 and Q3 sharply trailing the MPC's projections for these quarters, allowing for an additional 75 bps of rate cuts in this calendar year.

The economist added, "A 25 bps rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 bps each in the August and October 2025 policy reviews."

"If the GDP growth print for Q4 FY2025 does not report an acceleration from the 6.2% seen for Q3 FY2025, the MPC may consider frontloading the rate easing, with a 50 bps cut in the upcoming review," ICRA's economist said.

Furthermore, Arsh Mogre, Economist, PL Capital highlighted that the data now anchor headline inflation around ~3 % for the next two months, with food prices cushioned by ample stocks and an above-normal-monsoon forecast, and core categories capped by subdued wage-cost pass-through. Global commodity relief and currency firmness further tame imported pressures. On current trajectories, the FY-26 average CPI is set to hover near 3.7 %, keeping real policy rates above 200 bp and giving markets conviction that the Monetary Policy Committee has room to recalibrate the policy rate at its June review. Crucially, the April print shows no evidence that recent geopolitical frictions are feeding into India's price formation. In short, the disinflation engine is firing on all cylinders, and shoring up macro-financial stability as the economy transitions into FY-26.

For May 2025, Anitha Rangan, Economist, Equirus Securities said, overall, into the summer month of May'25 we observe that food prices remain contained and have not seen any spike in vegetable prices. Cereal inflation is also well contained with robust wheat and rice crop. Prospects into kharif look bright with good monsoon ahead. With oil prices contained, fuel and second order inflation into core should also not be a worry. This bodes well for RBI to continue its accommodation both with rates and liquidity, without risk of liquidity infusion turning inflationary.

The price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During the month of April 2025, NSO collected prices from 100% villages and 98.6% urban markets while the market-wise prices reported therein were 89.4% for rural and 92.3% for urban.

The next CPI inflation data will be released on June 12, 2025.