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Economy

Retail inflation at 77-month low

Index of industrial production registers 1.5 per cent increase, primarily led by a 3.9 per cent growth in manufacturing sector

News Arena Network - New Delhi - UPDATED: July 28, 2025, 05:33 PM - 2 min read

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The monthly economic review for June released by the Union Ministry of Finance shows resilient domestic supply and demand fundamentals, as reflected in a 77-month low Consumer Price Index (CPI) inflation. While inflation has remained within the target range in the first quarter of FY 26, a favourable monsoon has resulted in higher kharif sowing in June.

 

Consumer price index-based retail inflation eased to 2.1 per cent in June, the lowest in the past more than six years. Retail inflation in May stood at 2.8 per cent.

 

Retail inflation in Q1 of FY 26 stood at 2.7 per cent, well below the RBI’s projected inflation rate of 2.9 per cent for the quarter. However, the wholesale price index fell into deflation in June, recording -0.1 per cent in the month.

 

Backed by the demand for exports, India’s manufacturing remained on the higher side in the first quarter of FY 26. The Manufacturing Purchasing Managers’ Index (PMI) average stood at 58.1 in the quarter. This was comfortably above the threshold of 50.  The manufacturing PMI in June is 58.4, the highest in the last 14 months. The service sector PMI in the first quarter stood at an average of 59.3. The service sector growth in the quarter was aided by demand in the domestic and export markets.

 

India’s industrial sector saw modest growth in June 2025 with the Index of Industrial Production (IIP) registering a 1.5 per cent increase as compared to 1.2 per cent in the previous month. The uptick in IIP was primarily led by a 3.9 per cent increase in the manufacturing sector, although mining and electricity recorded a decline of 8.7 per cent and 2.6 per cent, respectively. The overall IIP stood at 153.3 in June 2025, up from 151.0 in June 2024.

 

Manufacturing remained the driving force with 15 out of 23 industry groups showing positive growth. Among the major contributors to growth within manufacturing were basic metals, which grew by 9.6 per cent, coke and refined petroleum products (4.2 per cent) and fabricated metal products (excluding machinery and equipment), which recorded a notable increase of 15.2 per cent.

 

 

Current account balance

 

India’s current account saw a surplus of 13.5 billion in Q4 of FY 24. This was a turnaround from a deficit of $11.3 billion in the previous quarter.  India’s current account deficit in the first quarter of the fiscal year came down to $23.3 billion, as against $26 billion in the same period of the previous fiscal year. The improvement in the current account deficit was largely driven by high service exports and private remittances.

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