Hopes of another interest rate cut by RBI rise as retail inflation at 6-year low; wholesale inflation turns negative

India’s consumer price inflation or retail inflation in June, 2025 was at 2.1% year-on-year, according to data from Ministry of Statistics.  The is the lowest level of retail inflation in the country since January, 2019. Wholesale inflation in the month stood at – 0.13%, year-on- year.  This means that wholesale prices in June 2025 have come down, in comparison to those in June, 2024.

RBI may go for another interest rate cut

These inflation numbers have raised the hope that Reserve Bank of India may go for another 25 basis point rate cut in its August monetary policy meeting. One basis point is 0.01%.  Target retail inflation rate range of RBI is 2% – 6%. The retail inflation rate in June was at the lower end of this range.

The negative WPI number may indicate to ongoing slowdown in the economy. Negative inflation or deflation is mostly not good for an economy. A small and positive wholesale inflation rate is good for the economy. So the central bank may go for giving another boost to the Indian economy, by cutting down interest rate further.

This may be a reason why Indian equity markets are up today, 15^th July, after being in red for the previous 5 days. At 12:50 p.m. Indian Standard Time today, Nifty 50 is up 133.85 points or 0.53%. Sensex is up by 397.85 points or 0.48%. Nifty 50 is up by 6.21% year-to-date in 2025. Sensex is up by 5.28% in this period.

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Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2144511