Why in News?
Retail inflation eases to six-year low: India’s retail inflation dropped to a 75-month low of 2.8% in May 2025, mainly due to falling food prices, marking the lowest Consumer Price Index inflation (CPI) since February 2019.
Description:
- Definition: Retail inflation is measured by the Consumer Price Index (CPI), which tracks changes in prices of goods and services purchased by households for daily consumption.
- Calculation Method: CPI = (Cost of Fixed Basket in Current Year / Cost in Base Year) × 100;
The current base year is 2012. - Compiled by: The National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) releases monthly CPI data for Rural, Urban, and Combined sectors.
- Significance: CPI is a key macroeconomic indicator of inflation, used by the RBI for inflation targeting and for maintaining price stability.
- Economic Utility: CPI helps assess the cost of living, purchasing power, real value of wages, and is also used as a deflator in national accounts.
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