FX.co ★ India Inflation Rate Falls Below RBI Tolerance Band

India's annual consumer price inflation rate declined to 1.55% in July 2025, down from 2.1% in June, substantially below the market prediction of 1.76%. This marks the ninth consecutive drop in the inflation rate, bringing it to just one basis point short of the record low set in June 2017. It is the first instance since 2019 that the inflation rate has dipped below the Reserve Bank of India's target range of 2%-6%, suggesting the possibility of another interest rate reduction this year by the central bank. The reduction was primarily due to a second consecutive fall in food prices, which dropped by 1.76% compared to an increase of 1.06% in June, driven by a significant decrease in vegetable costs, down by 20.69% following a 19% decline. Meanwhile, inflation decelerated for transport and communication, from 3.9% to 2.12%, while remaining relatively stable for housing, changing slightly from 3.24% to 3.17%. Month-over-month, consumer prices increased by 0.9%.