India’s CPI Falls to 3.16%—Lowest Since 2019, Driven by Food Disinflation; June Rate Cut Back in Play

India’s CPI Falls to 3.16%—Lowest Since 2019, Driven by Food Disinflation; June Rate Cut Back in Play

By- Mr. Arsh Mogre, Economist, PL Capital 

“India’s headline CPI fell to 3.16 % YoY—an 18 bp drop from March and the softest print since July 2019—beating consensus by 11 bp and marking a third straight month inside the lower half of the RBI’s 2-6 % target band. The moderation is almost entirely food-led. Food inflation fell to 1.78 %, its weakest level in three-and-a-half years, as vegetables plunged -11 % YoY, pulses -5.2 %, and cereal inflation eased to 5.35 % from 5.93 % . Supply-chain normalisation after last year’s weather shock, stronger market arrivals and lower procurement prices drove the reversal.

Momentum data reinforce the turn. The all-items index rose just 0.31 % MoM, down from 0.53 % in March, while food prices actually fell -0.15 % MoM, the best early-summer reading in five years. Services remain orderly: housing held at 3.00 %, education crept to 4.13 %, health stayed at 4.25 %, and the broader core showed no evidence of second-round pass-through despite a jump in personal-care items to 12.9%. Fuel-and-light inflation picked up to 2.92 % as LPG revisions fed through, but a 16% slide in global crude and a firmer rupee continued to mute imported cost-push pressures. Regionally, rural CPI slowed to 2.92% and urban to 3.36%; the spread between the hottest (Kerala 5.9 %) and coolest large state has narrowed to barely two percentage points, signalling a genuinely broad disinflation pulse

What lies ahead? 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, 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.”