May 2025 Inflation Hits Six-Year Low at 2.82%, But Kerala, Punjab, and J&K Stay Hot
India’s Consumer Price Index (CPI) inflation cooled sharply in May 2025, dropping to 2.82%—its lowest year‑on‑year level in over six years and well below the Reserve Bank of India’s (RBI) 4% comfort zone . This marks a 34-basis-point decline from April’s 3.16% reading, largely thanks to a moderation in food costs, including staples like pulses, vegetables, fruits, cereals, sugar, eggs, and household goods.
However, a look beneath the national average reveals a striking state-wise disparity:
- Kerala recorded the highest inflation at ≈ 6.46%, more than double the national average, reflecting regional supply-chain pressures.
- Punjab, a major grain-producing state, saw inflation at around 5.21%.
- Jammu & Kashmir posted a headline rate near 4.55%—still significantly higher than the national trend.
Most other states hovered between 2–4%, tracking close to the national average of 2.82%.
Urban and rural inflation showed notable divergence:
- Rural CPI: 2.59% (down from 2.92% in April)
- Urban CPI: 3.07% (down from 3.36%)
State-wise Inflation Rates – May 2025
| State / UT | Inflation (%) |
|---|---|
| Kerala | 6.46% |
| Punjab | 5.21% |
| Jammu & Kashmir (incl. Ladakh) | 4.55% |
| Most Other States | 2.00% – 4.00% |
| All-India Average | 2.82% |
Food inflation also eased to 0.99% overall—the lowest since October 2021—led by rural (0.95%) and urban (0.96%) declines.
Despite relief on food, some categories saw slight increases: housing inflation edged up to 3.16%, education remained elevated at 4.12%, health at 4.34%, and transport & communication at 3.85%.
Despite relief on food, some categories saw slight increases: housing inflation edged up to 3.16%, education remained elevated at 4.12%, health at 4.34%, and transport & communication at 3.85%.
Expert Insight & Policy Implications
The sustained dip in inflation supports the RBI’s recent 50 bps rate cut, reinforcing expectations of continued accommodative monetary policy . Economists now peg FY‑26 CPI inflation at around 3.7% or lower, contingent on favorable monsoon and stable food prices.
However, persistently higher inflation pockets—especially in Kerala, Punjab, and J&K—indicate uneven supply dynamics across regions, warranting more targeted policy monitoring.
Summary
- National CPI inflation in May 2025 fell to 2.82%, the lowest since February 2019.
- Food inflation eased to under 1%, helping drive down headline figures.
- State contrast: Kerala (6.46%), Punjab (5.21%), and Jammu & Kashmir (4.55%) saw significantly higher inflation than the national average.
- Urban–rural split: Rural inflation at 2.59%, urban at 3.07%.
- Policy impact: Declining inflation backs RBI’s rate cuts; however, regional supply issues remain a concern.