Why in News?
Retail inflation fell to 1.55% in July 2025—its lowest since June 2017—driven by deflation in vegetables, pulses, spices, and meat, with WPI inflation also easing, marking nine months of price moderation below RBI’s 2–6% comfort band.
Description:
| Retail Inflation: Meaning: Retail inflation measures the rise in prices of goods and services that households buy for consumption at the retail level.Measured by: The Consumer Price Index (CPI) in India, compiled by the Ministry of Statistics and Programme Implementation (MoSPI).Coverage: Includes categories like food & beverages, housing, clothing, fuel, and services.Significance:Reflects the cost of living for consumers.The Reserve Bank of India uses CPI-based inflation as the primary metric for its Monetary Policy under the inflation-targeting framework (current target: 4% ± 2%). |
| Feature | Consumer Price Index (CPI) | Wholesale Price Index (WPI) |
| Meaning | Measures retail inflation paid by consumers | Measures wholesale inflation faced by producers |
| Published by | National Statistical Office (NSO), Ministry of Statistics & Programme Implementation | Office of Economic Adviser, Ministry of Commerce & Industry |
| Base Year (as of 2025) | 2012 (for CPI-Combined) | 2011–12 |
| Frequency | Monthly | Monthly |
| Price Level Captured At | Retail level | Wholesale level |
| Weightage – Food Items | High (≈ 45% in CPI-Combined) | Low (≈ 24%) |
| Coverage | Goods & services (includes health, education, housing, etc.) | Goods only (excludes services) |
| Used by RBI for Inflation Targeting? | Yes – CPI (Combined) is the benchmark for RBI’s inflation targeting | No |
| Types of Indices | CPI-Rural, CPI-Urban, CPI-Combined, CPI for Industrial Workers (IW), Agricultural Labourers (AL), etc. | Single WPI index with major groups: Primary Articles, Fuel & Power, Manufactured Products |
| Reflects Impact On | Consumers (end users) | Producers and distributors |
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