NEWS

• Retail inflation dropped to 3.16% in April 2025, marking a 69-month low.
• This is the sixth consecutive month of declining retail inflation.
• In March 2025, the inflation rate was 3.34%.
• Inflation peaked at 6.21% in October 2024, the highest in 14 months.
• April’s figure is the lowest since July 2019.

Reasons Behind the Decline

• Sharp decline in food prices is the primary driver.
• Notable drop in prices of:
  • Vegetables
  • Pulses

UNDERSTANDING RETAIL INFLATION (CPI-BASED INFLATION)

What is Retail Inflation?

• Also called Consumer Price Index (CPI) inflation.
• Measures changes in retail prices of goods and services consumed by households.
• Reflects the cost of living and changes in the purchasing power of money.

What CPI Reflects

• General cost of living trends.
• Purchasing power of consumers.
• Price movement of essential goods and services.
• Real value of the Indian rupee over time.

How CPI is Calculated

• Based on the cost of a fixed basket of goods and services.
• Compares current prices with those in a base year (currently 2012).
• CPI data is compiled and released monthly by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
• Data is published for:
  • Rural
  • Urban
  • Combined sectors
  • All-India and state-wise

Uses of the Consumer Price Index (CPI)

Macroeconomic Indicator

• Acts as a key inflation indicator for economic policy.
• Used by the Reserve Bank of India (RBI) and government for inflation targeting.

Policy and Financial Planning

• Helps in evaluating the real value of wages, salaries, and pensions.
• Aids in measuring the purchasing power of the national currency.
• Used to adjust interest rates and deflate national accounts