The inflation in India has witnessed a drastic shift in July 2025 compared to the same month last year. The Consumer Price Index (CPI) inflation falling to 1.55%, showing a downward shift from 7.44% in July 2024, according to data cited by Investywise and official government releases. This symbolises a lowest inflation rate in over seven years, giving relief to consumers but not across the segments.
The major contributor to this drops in inflation was food, which turned negative at -1.76% in July 2025 compared to 11.5% a year earlier. Prices of vegetables fell by 20.7%, while cereals, pulses, eggs, and edible oils also saw substantial drop. This was driven by an amalgamation of better harvests, improvised supply chains, and lower global commodity prices.
Long term operational reforms needed to control Inflations
However, healthcare inflation continued mounting to 4.57%, and fuel and lighting inflation edged up to 2.67%. the costs of Education and housing were also raised, even as broader inflation were less impacted. Analysts caution that these sectors are not much sensitive to short-term economic cycles and needed long-term operational reforms.
The essentials became inexpensive, inflation in services and input costs in sectors like health and utilities are likely to retain the core inflation above 4% in the medium term.
Inflation: Fluctuations in Urban and Rural Areas
Experts also noted that both the urban and rural consumers are facing inflation differently. Rural inflation stuck sharply to 1.18%, thanks to the drop in food costs. On the other hand, urban inflation continued to be higher at 2.05%, effected by costlier services and housing sector. The Reserve Bank of India is expected to view this disinflation as a short-term shift, especially with global oil prices fluctuations and uncertainty in monsoon ahead.
GoI may need to keep a balance between growth rate and inflation, particularly through infrastructure investments and better social safety nets to offset rising healthcare and education costs.
Also Read: Why Are Indian Households Expecting Lower Inflation? RBI Survey Reveals Surprising Shifts
Ankur Mishra is a journalist who covers an extensive range of news, from business, stock markets, IPOs to geopolitics, world affairs, international crises, and general news. With over a decade of experience in the business domain, Ankur has been associated with some of the reputed media brands. Through a sharp eye on global marketplaces along with deep insights and analysis of business strategies, Ankur brings simplicity to the complex economic matrix to decode market trends and empower people.
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