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.
State-wise Inflation Rates – May 2025
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.
