By Siddhi Nawar
India’s retail inflation, as measured by the Consumer Price Index (CPI), eased to 2.82% in May 2025, down by 34 basis points from 3.16% in April. This marks the lowest year-on-year inflation reading since February 2019, underscoring a significant cooling of price pressures.

Food inflation, tracked by the All India Consumer Food Price Index (CFPI), also moderated sharply to 0.99% (provisional). A similar softening was seen across both rural and urban areas, with food inflation rates at 0.95% and 0.96%, respectively.

Based on data from the past 13 months, food inflation in May 2025 saw a notable 79 basis point drop compared to April, registering its lowest level since October 2021.

The sharp decline in both headline and food inflation in May 2025 can largely be attributed to easing price pressures in key categories such as pulses and products, vegetables, fruits, cereals and products, household goods and services, sugar and confectionery, and eggs, along with a favourable base effect that amplified the moderation.

Rural vs Urban trends
Inflationary pressures eased notably across both rural and urban regions in May 2025. In rural India, headline CPI inflation dropped to 2.59% (provisional), down from 2.92% in April. Food inflation, as measured by the Consumer Food Price Index (CFPI), also witnessed a sharp decline, falling to 0.95% in May from 1.85% the previous month.

Urban areas recorded a similar trend. Headline inflation in urban India eased to 3.07% (provisional) in May, compared to 3.36% in April. Food inflation in urban regions fell more noticeably, dropping to 0.96% in May from 1.64% in April.

Sectoral Trends
Inflation in the housing segment, which is measured only for urban areas, rose slightly to 3.16% in May from 3.06% in April on a year-on-year basis. Education inflation remained largely steady at 4.12% (provisional) in May, compared to 4.13% in April. This reflects combined data for both rural and urban areas.

As for the health sector, Price pressures inched up slightly, with inflation standing at 4.34% in May versus 4.25% in the previous month. This too covers both rural and urban populations.

The inflation rate in the transport and communication category climbed to 3.85% in May from 3.67% in April, reflecting rising costs across both rural and urban segments.

Inflation in fuel and light moderated to 2.78% in May, a slight decline from 2.92% in April. This category is also aggregated across rural and urban households.

Trends across states
In May 2025, Kerala recorded the highest year-on-year inflation among major states with over 50 lakh population, at 6.46%. It was followed by Punjab (5.21%), Jammu & Kashmir (4.55%), Haryana (3.67%), and Uttarakhand (3.47%). These states topped the inflation chart despite the overall national decline.

Movement of Inflation over the past six months: