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As on : 29-May-2025

Economy - Reports
29-May-2025 12:43

Core inflation eases to 3.5% FY25 compared to 4.3% in FY24

The Reserve Bank of India (RBI) has stated in its latest annual report that domestic inflation converged closer towards the target during 2024-25 aided by easing input cost pressures, proactive supply management measures by the government and continuing transmission of past monetary policy actions. Headline inflation moderated to an average of 4.6 per cent during 2024-25 from 5.4 per cent in the previous year, largely driven by a moderation in core (CPI excluding food and fuel) inflation to 3.5 per cent and deflation in fuel at 2.5 per cent. The moderation in core inflation was broad-based across goods and services. Deflation in fuel was driven by reduction in liquefied petroleum gas (LPG) and kerosene prices on the back of softer global energy prices. In contrast, food inflation remained elevated at 6.7 per cent in 2024-25, with intermittent spikes due to overlapping supply shocks emanating from weather anomalies imparting volatility to headline inflation. Food inflation recorded an intra-year peak of 9.7 per cent in October 2024, before declining dramatically to 2.9 per cent by March 2025. While vegetables inflation experienced heightened volatility during the year, inflation persisted in cereals, fruits, edible oils, and meat and fish, reflecting tight supply conditions. Inflation excluding food and fuel, or core inflation, eased to 3.5 per cent during 2024-25 from 4.3 per cent a year ago, driven mainly by clothing and footwear, housing, household goods and services, health, and education.

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