Prices and Inflation: Understanding the Dynamics (2024-25) | Indian Economy for UPSC CSE PDF Download

 Page 1


04
CHAPTER
117
PRICES AND INFLATION: 
UNDERSTANDING THE 
DYNAMICS 
In gauging the health of the global economy, understanding the trends in 
inflation is essential. While global inflation peaked in 2022 due to supply chain 
disruptions and geopolitical tensions, it has declined since then, aided by policy 
measures. In India, retail inflation eased in FY25 due to timely interventions by 
the government and the Reserve Bank of India. Core inflation reached its lowest 
point in a decade, while food inflation was affected by supply chain disruptions 
and adverse weather conditions.
Onion and tomato prices are affected by the decline in production, partly due 
to extreme weather conditions and monsoon-induced supply chain disruptions. 
On pulses, despite being a major producer, India faces a gap in demand and 
supply. The government has undertaken several measures to rein in the prices 
of vegetables like onion and tomato which included procurement and buffer 
stocking of onion under price stabilisation fund and subsidised sale of onion and 
tomato. Also, many administrative measures have been taken-up to address the 
price pressures in pulses such as subsidised retail sale, stock limits and easing 
imports.
Estimates suggest that India's retail price inflation will align progressively with 
the target. Global commodity prices are expected to decline, potentially easing 
core and food inflation. Long-term price stability could be achieved by robust 
data systems for monitoring prices, developing climate-resilient crops, reducing 
crop damage and post-harvest losses.
Page 2


04
CHAPTER
117
PRICES AND INFLATION: 
UNDERSTANDING THE 
DYNAMICS 
In gauging the health of the global economy, understanding the trends in 
inflation is essential. While global inflation peaked in 2022 due to supply chain 
disruptions and geopolitical tensions, it has declined since then, aided by policy 
measures. In India, retail inflation eased in FY25 due to timely interventions by 
the government and the Reserve Bank of India. Core inflation reached its lowest 
point in a decade, while food inflation was affected by supply chain disruptions 
and adverse weather conditions.
Onion and tomato prices are affected by the decline in production, partly due 
to extreme weather conditions and monsoon-induced supply chain disruptions. 
On pulses, despite being a major producer, India faces a gap in demand and 
supply. The government has undertaken several measures to rein in the prices 
of vegetables like onion and tomato which included procurement and buffer 
stocking of onion under price stabilisation fund and subsidised sale of onion and 
tomato. Also, many administrative measures have been taken-up to address the 
price pressures in pulses such as subsidised retail sale, stock limits and easing 
imports.
Estimates suggest that India's retail price inflation will align progressively with 
the target. Global commodity prices are expected to decline, potentially easing 
core and food inflation. Long-term price stability could be achieved by robust 
data systems for monitoring prices, developing climate-resilient crops, reducing 
crop damage and post-harvest losses.
Economic Survey 2024-25
118
INTRODUCTION
4.1. In the ever-evolving landscape of global economics, understanding the dynamics 
of inflation is crucial. The persistent inflationary pressures pose several challenges for 
policymakers and the general public. On the global front, central banks are cautiously 
unwinding their restrictive policies to balance inflation control with economic recovery. 
In India, the various government initiatives and monetary policy reviews are helping to 
keep inflationary pressure at check.
4.2. Global inflation peaked at 8.7 per cent in 2022, driven by supply chain disruptions 
and geopolitical tensions, to 5.7 per cent in 2024
1
. In India, retail inflation moderated 
from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December) despite challenging 
food price dynamics. Food items constitute about two-fifths of the consumer price index 
in India. Hence, the Consumer Food Price Index (CFPI) is a significant determinant of 
retail inflation. In recent years, food inflation has been a major contributor to headline 
inflation. However, an increase in prices is not widespread across all food categories. It 
is primarily driven by a few items. 
4.3. Given this context, the chapter is organised into four sections. Section 2 analyse the 
global inflation, while Section 3 examines the domestic inflation trends and discusses 
the proximate factors affecting inflation dynamics. The chapter concludes with a set 
of recommendations in Section 4. The idea behind this presentation plan is to give 
an overview about inflation dynamics to policymakers and stakeholders to help them 
navigate the complexities of managing inflation.
GLOBAL INFLATION
Global resilience amid synchronised monetary policy tightening 
4.4. Despite the sharp and synchronised tightening of monetary policy across countries, 
the global economy has demonstrated an unusual level of resilience in output growth 
throughout the disinflationary process. This resilience is reflected in the steady decline 
of the headline inflation rate in most countries during FY24 and the current year. The 
concerted efforts by central banks to curb inflation through increased interest rates 
and other policy measures have yielded positive outcomes, resulting in a significant 
reduction in inflationary pressures.
1  International Monetary Fund (2025, January) World Economic Outlook Update-Global growth: Divergent and 
Uncertain. Washington, DC. (https://tinyurl.com/29ussy2x)
Page 3


04
CHAPTER
117
PRICES AND INFLATION: 
UNDERSTANDING THE 
DYNAMICS 
In gauging the health of the global economy, understanding the trends in 
inflation is essential. While global inflation peaked in 2022 due to supply chain 
disruptions and geopolitical tensions, it has declined since then, aided by policy 
measures. In India, retail inflation eased in FY25 due to timely interventions by 
the government and the Reserve Bank of India. Core inflation reached its lowest 
point in a decade, while food inflation was affected by supply chain disruptions 
and adverse weather conditions.
Onion and tomato prices are affected by the decline in production, partly due 
to extreme weather conditions and monsoon-induced supply chain disruptions. 
On pulses, despite being a major producer, India faces a gap in demand and 
supply. The government has undertaken several measures to rein in the prices 
of vegetables like onion and tomato which included procurement and buffer 
stocking of onion under price stabilisation fund and subsidised sale of onion and 
tomato. Also, many administrative measures have been taken-up to address the 
price pressures in pulses such as subsidised retail sale, stock limits and easing 
imports.
Estimates suggest that India's retail price inflation will align progressively with 
the target. Global commodity prices are expected to decline, potentially easing 
core and food inflation. Long-term price stability could be achieved by robust 
data systems for monitoring prices, developing climate-resilient crops, reducing 
crop damage and post-harvest losses.
Economic Survey 2024-25
118
INTRODUCTION
4.1. In the ever-evolving landscape of global economics, understanding the dynamics 
of inflation is crucial. The persistent inflationary pressures pose several challenges for 
policymakers and the general public. On the global front, central banks are cautiously 
unwinding their restrictive policies to balance inflation control with economic recovery. 
In India, the various government initiatives and monetary policy reviews are helping to 
keep inflationary pressure at check.
4.2. Global inflation peaked at 8.7 per cent in 2022, driven by supply chain disruptions 
and geopolitical tensions, to 5.7 per cent in 2024
1
. In India, retail inflation moderated 
from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December) despite challenging 
food price dynamics. Food items constitute about two-fifths of the consumer price index 
in India. Hence, the Consumer Food Price Index (CFPI) is a significant determinant of 
retail inflation. In recent years, food inflation has been a major contributor to headline 
inflation. However, an increase in prices is not widespread across all food categories. It 
is primarily driven by a few items. 
4.3. Given this context, the chapter is organised into four sections. Section 2 analyse the 
global inflation, while Section 3 examines the domestic inflation trends and discusses 
the proximate factors affecting inflation dynamics. The chapter concludes with a set 
of recommendations in Section 4. The idea behind this presentation plan is to give 
an overview about inflation dynamics to policymakers and stakeholders to help them 
navigate the complexities of managing inflation.
GLOBAL INFLATION
Global resilience amid synchronised monetary policy tightening 
4.4. Despite the sharp and synchronised tightening of monetary policy across countries, 
the global economy has demonstrated an unusual level of resilience in output growth 
throughout the disinflationary process. This resilience is reflected in the steady decline 
of the headline inflation rate in most countries during FY24 and the current year. The 
concerted efforts by central banks to curb inflation through increased interest rates 
and other policy measures have yielded positive outcomes, resulting in a significant 
reduction in inflationary pressures.
1  International Monetary Fund (2025, January) World Economic Outlook Update-Global growth: Divergent and 
Uncertain. Washington, DC. (https://tinyurl.com/29ussy2x)
Prices and Inflation
119
Chart IV.1a: Headline inflation 
eases across countries
Chart IV.1b: Monetary targeting 
lowered inflation and stabilised 
output globally
6.3
3.9
2.9
0
2
4
6
8
0
2
4
6
8
10
12
FY23 FY24 FY25*
UK Brazil Mexico
Germany US SA
Philippines India France
Indonesia Malaysia Japan
China Average**
Per cent
4.1
5.9
4.0
3.1
4.5
5.9
2.9
2.9
5.8
Av. GDP Growth Av. Inflation Rate Av. Policy Rate
Per cent
2022 2023 2024
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI, IMF WEO Database Oct 2024 and Jan 
2025  update, Central bank policy rates, BIS 
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.1a.
Decline in core inflation
4.5. In alignment with the downward trend in headline inflation, core inflation, which 
excludes volatile food and energy prices has also decreased in most countries. The 
decline can be predominantly attributed to a moderation in international commodity 
prices. This trend highlights the effectiveness of policy interventions in stabilising 
prices across various sectors. 
Chart IV.2: Core inflation also moderates
4.8
4.0
2.8
0
2
4
6
0
2
4
6
8
10
FY23 FY24 FY25*
Brazil Mexico UK
India US Philippines
SA Germany France
Malaysia Indonesia Japan
China Average**
Per cent
-4 -2 0
Indonesia
China
South Africa
Japan
Malaysia
US
India
France
Germany
Mexico
Brazil
UK
Philippines
change in inflation rate  (in percentage 
points) (FY25 over FY24, Apr-Dec)
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.2.
Per cent Per cent
Page 4


04
CHAPTER
117
PRICES AND INFLATION: 
UNDERSTANDING THE 
DYNAMICS 
In gauging the health of the global economy, understanding the trends in 
inflation is essential. While global inflation peaked in 2022 due to supply chain 
disruptions and geopolitical tensions, it has declined since then, aided by policy 
measures. In India, retail inflation eased in FY25 due to timely interventions by 
the government and the Reserve Bank of India. Core inflation reached its lowest 
point in a decade, while food inflation was affected by supply chain disruptions 
and adverse weather conditions.
Onion and tomato prices are affected by the decline in production, partly due 
to extreme weather conditions and monsoon-induced supply chain disruptions. 
On pulses, despite being a major producer, India faces a gap in demand and 
supply. The government has undertaken several measures to rein in the prices 
of vegetables like onion and tomato which included procurement and buffer 
stocking of onion under price stabilisation fund and subsidised sale of onion and 
tomato. Also, many administrative measures have been taken-up to address the 
price pressures in pulses such as subsidised retail sale, stock limits and easing 
imports.
Estimates suggest that India's retail price inflation will align progressively with 
the target. Global commodity prices are expected to decline, potentially easing 
core and food inflation. Long-term price stability could be achieved by robust 
data systems for monitoring prices, developing climate-resilient crops, reducing 
crop damage and post-harvest losses.
Economic Survey 2024-25
118
INTRODUCTION
4.1. In the ever-evolving landscape of global economics, understanding the dynamics 
of inflation is crucial. The persistent inflationary pressures pose several challenges for 
policymakers and the general public. On the global front, central banks are cautiously 
unwinding their restrictive policies to balance inflation control with economic recovery. 
In India, the various government initiatives and monetary policy reviews are helping to 
keep inflationary pressure at check.
4.2. Global inflation peaked at 8.7 per cent in 2022, driven by supply chain disruptions 
and geopolitical tensions, to 5.7 per cent in 2024
1
. In India, retail inflation moderated 
from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December) despite challenging 
food price dynamics. Food items constitute about two-fifths of the consumer price index 
in India. Hence, the Consumer Food Price Index (CFPI) is a significant determinant of 
retail inflation. In recent years, food inflation has been a major contributor to headline 
inflation. However, an increase in prices is not widespread across all food categories. It 
is primarily driven by a few items. 
4.3. Given this context, the chapter is organised into four sections. Section 2 analyse the 
global inflation, while Section 3 examines the domestic inflation trends and discusses 
the proximate factors affecting inflation dynamics. The chapter concludes with a set 
of recommendations in Section 4. The idea behind this presentation plan is to give 
an overview about inflation dynamics to policymakers and stakeholders to help them 
navigate the complexities of managing inflation.
GLOBAL INFLATION
Global resilience amid synchronised monetary policy tightening 
4.4. Despite the sharp and synchronised tightening of monetary policy across countries, 
the global economy has demonstrated an unusual level of resilience in output growth 
throughout the disinflationary process. This resilience is reflected in the steady decline 
of the headline inflation rate in most countries during FY24 and the current year. The 
concerted efforts by central banks to curb inflation through increased interest rates 
and other policy measures have yielded positive outcomes, resulting in a significant 
reduction in inflationary pressures.
1  International Monetary Fund (2025, January) World Economic Outlook Update-Global growth: Divergent and 
Uncertain. Washington, DC. (https://tinyurl.com/29ussy2x)
Prices and Inflation
119
Chart IV.1a: Headline inflation 
eases across countries
Chart IV.1b: Monetary targeting 
lowered inflation and stabilised 
output globally
6.3
3.9
2.9
0
2
4
6
8
0
2
4
6
8
10
12
FY23 FY24 FY25*
UK Brazil Mexico
Germany US SA
Philippines India France
Indonesia Malaysia Japan
China Average**
Per cent
4.1
5.9
4.0
3.1
4.5
5.9
2.9
2.9
5.8
Av. GDP Growth Av. Inflation Rate Av. Policy Rate
Per cent
2022 2023 2024
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI, IMF WEO Database Oct 2024 and Jan 
2025  update, Central bank policy rates, BIS 
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.1a.
Decline in core inflation
4.5. In alignment with the downward trend in headline inflation, core inflation, which 
excludes volatile food and energy prices has also decreased in most countries. The 
decline can be predominantly attributed to a moderation in international commodity 
prices. This trend highlights the effectiveness of policy interventions in stabilising 
prices across various sectors. 
Chart IV.2: Core inflation also moderates
4.8
4.0
2.8
0
2
4
6
0
2
4
6
8
10
FY23 FY24 FY25*
Brazil Mexico UK
India US Philippines
SA Germany France
Malaysia Indonesia Japan
China Average**
Per cent
-4 -2 0
Indonesia
China
South Africa
Japan
Malaysia
US
India
France
Germany
Mexico
Brazil
UK
Philippines
change in inflation rate  (in percentage 
points) (FY25 over FY24, Apr-Dec)
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.2.
Per cent Per cent
Economic Survey 2024-25
120
Global food inflation eases with divergence in a few EMEs
4.6. Global food inflation is on a downward trend, aligning with the patterns observed 
in both headline and core inflation. Improving global supply conditions due to solid 
harvests and favourable growing conditions contributed to the softening of food 
prices
2
. However, some emerging economies, such as Brazil, India, and China have a 
contrasting pattern. 
Chart IV.3a: Global food inflation 
declines
Chart IV.3b: Diverging trend 
in a few EMEs
9.4
6.0
3.2
0
2
4
6
8
10
0
4
8
12
16
20
FY23 FY24 FY25*
Germany UK Mexico
Brazil SA France
US Philippines India
Malaysia Japan China
Indonesia Average**
Per cent
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.3a.
EMEs stands for emerging economies
DOMESTIC INFLATION
Softening core inflation cools headline inflation
4.7. India's headline inflation, measured by the Consumer Price Index (CPI), has 
moderated in FY25 (April-December) compared to FY24. This decline is primarily 
due to a significant decrease in core inflation, which dropped by 0.9 percentage points 
between FY24 and FY25 (April-December). The sharp decline in core inflation was 
largely driven by core services inflation, which was lower than core goods inflation. 
A decrease in fuel price inflation has also contributed to the moderation in headline 
inflation, alleviating pressure on household budgets. In general, the decline in retail 
inflation can be attributed to a reduction in input prices, as reflected in wholesale price 
inflation, which was in the deflationary zone (-0.7 per cent) in FY24 and remained low 
in FY25 (April-December). 
2  Commodity Markets Outlook, World Bank (2024, October) (https://tinyurl.com/dyduh9tu).
Per cent
Page 5


04
CHAPTER
117
PRICES AND INFLATION: 
UNDERSTANDING THE 
DYNAMICS 
In gauging the health of the global economy, understanding the trends in 
inflation is essential. While global inflation peaked in 2022 due to supply chain 
disruptions and geopolitical tensions, it has declined since then, aided by policy 
measures. In India, retail inflation eased in FY25 due to timely interventions by 
the government and the Reserve Bank of India. Core inflation reached its lowest 
point in a decade, while food inflation was affected by supply chain disruptions 
and adverse weather conditions.
Onion and tomato prices are affected by the decline in production, partly due 
to extreme weather conditions and monsoon-induced supply chain disruptions. 
On pulses, despite being a major producer, India faces a gap in demand and 
supply. The government has undertaken several measures to rein in the prices 
of vegetables like onion and tomato which included procurement and buffer 
stocking of onion under price stabilisation fund and subsidised sale of onion and 
tomato. Also, many administrative measures have been taken-up to address the 
price pressures in pulses such as subsidised retail sale, stock limits and easing 
imports.
Estimates suggest that India's retail price inflation will align progressively with 
the target. Global commodity prices are expected to decline, potentially easing 
core and food inflation. Long-term price stability could be achieved by robust 
data systems for monitoring prices, developing climate-resilient crops, reducing 
crop damage and post-harvest losses.
Economic Survey 2024-25
118
INTRODUCTION
4.1. In the ever-evolving landscape of global economics, understanding the dynamics 
of inflation is crucial. The persistent inflationary pressures pose several challenges for 
policymakers and the general public. On the global front, central banks are cautiously 
unwinding their restrictive policies to balance inflation control with economic recovery. 
In India, the various government initiatives and monetary policy reviews are helping to 
keep inflationary pressure at check.
4.2. Global inflation peaked at 8.7 per cent in 2022, driven by supply chain disruptions 
and geopolitical tensions, to 5.7 per cent in 2024
1
. In India, retail inflation moderated 
from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December) despite challenging 
food price dynamics. Food items constitute about two-fifths of the consumer price index 
in India. Hence, the Consumer Food Price Index (CFPI) is a significant determinant of 
retail inflation. In recent years, food inflation has been a major contributor to headline 
inflation. However, an increase in prices is not widespread across all food categories. It 
is primarily driven by a few items. 
4.3. Given this context, the chapter is organised into four sections. Section 2 analyse the 
global inflation, while Section 3 examines the domestic inflation trends and discusses 
the proximate factors affecting inflation dynamics. The chapter concludes with a set 
of recommendations in Section 4. The idea behind this presentation plan is to give 
an overview about inflation dynamics to policymakers and stakeholders to help them 
navigate the complexities of managing inflation.
GLOBAL INFLATION
Global resilience amid synchronised monetary policy tightening 
4.4. Despite the sharp and synchronised tightening of monetary policy across countries, 
the global economy has demonstrated an unusual level of resilience in output growth 
throughout the disinflationary process. This resilience is reflected in the steady decline 
of the headline inflation rate in most countries during FY24 and the current year. The 
concerted efforts by central banks to curb inflation through increased interest rates 
and other policy measures have yielded positive outcomes, resulting in a significant 
reduction in inflationary pressures.
1  International Monetary Fund (2025, January) World Economic Outlook Update-Global growth: Divergent and 
Uncertain. Washington, DC. (https://tinyurl.com/29ussy2x)
Prices and Inflation
119
Chart IV.1a: Headline inflation 
eases across countries
Chart IV.1b: Monetary targeting 
lowered inflation and stabilised 
output globally
6.3
3.9
2.9
0
2
4
6
8
0
2
4
6
8
10
12
FY23 FY24 FY25*
UK Brazil Mexico
Germany US SA
Philippines India France
Indonesia Malaysia Japan
China Average**
Per cent
4.1
5.9
4.0
3.1
4.5
5.9
2.9
2.9
5.8
Av. GDP Growth Av. Inflation Rate Av. Policy Rate
Per cent
2022 2023 2024
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI, IMF WEO Database Oct 2024 and Jan 
2025  update, Central bank policy rates, BIS 
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.1a.
Decline in core inflation
4.5. In alignment with the downward trend in headline inflation, core inflation, which 
excludes volatile food and energy prices has also decreased in most countries. The 
decline can be predominantly attributed to a moderation in international commodity 
prices. This trend highlights the effectiveness of policy interventions in stabilising 
prices across various sectors. 
Chart IV.2: Core inflation also moderates
4.8
4.0
2.8
0
2
4
6
0
2
4
6
8
10
FY23 FY24 FY25*
Brazil Mexico UK
India US Philippines
SA Germany France
Malaysia Indonesia Japan
China Average**
Per cent
-4 -2 0
Indonesia
China
South Africa
Japan
Malaysia
US
India
France
Germany
Mexico
Brazil
UK
Philippines
change in inflation rate  (in percentage 
points) (FY25 over FY24, Apr-Dec)
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.2.
Per cent Per cent
Economic Survey 2024-25
120
Global food inflation eases with divergence in a few EMEs
4.6. Global food inflation is on a downward trend, aligning with the patterns observed 
in both headline and core inflation. Improving global supply conditions due to solid 
harvests and favourable growing conditions contributed to the softening of food 
prices
2
. However, some emerging economies, such as Brazil, India, and China have a 
contrasting pattern. 
Chart IV.3a: Global food inflation 
declines
Chart IV.3b: Diverging trend 
in a few EMEs
9.4
6.0
3.2
0
2
4
6
8
10
0
4
8
12
16
20
FY23 FY24 FY25*
Germany UK Mexico
Brazil SA France
US Philippines India
Malaysia Japan China
Indonesia Average**
Per cent
Source: Bloomberg and Consumer Price Indices released by CSO, MoSPI
Note: *Inflation rate for FY25 is for April to December 2024, except for Japan, Malaysia and South Africa is 
until November 2024. ** Simple average of countries presented in chart IV.3a.
EMEs stands for emerging economies
DOMESTIC INFLATION
Softening core inflation cools headline inflation
4.7. India's headline inflation, measured by the Consumer Price Index (CPI), has 
moderated in FY25 (April-December) compared to FY24. This decline is primarily 
due to a significant decrease in core inflation, which dropped by 0.9 percentage points 
between FY24 and FY25 (April-December). The sharp decline in core inflation was 
largely driven by core services inflation, which was lower than core goods inflation. 
A decrease in fuel price inflation has also contributed to the moderation in headline 
inflation, alleviating pressure on household budgets. In general, the decline in retail 
inflation can be attributed to a reduction in input prices, as reflected in wholesale price 
inflation, which was in the deflationary zone (-0.7 per cent) in FY24 and remained low 
in FY25 (April-December). 
2  Commodity Markets Outlook, World Bank (2024, October) (https://tinyurl.com/dyduh9tu).
Per cent
Prices and Inflation
121
Chart IV.4: Headline and core inflation under control
-20
-15
-10
-5
0
5
10
15
20
-10
-6
-2
2
6
10
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Per cent
Per cent
CPI Inflation Core Inflation WPI Inflation (RHS)
Source: Consumer Price Indices released by CSO, MoSPI
Food Inflation is majorly driven by very few food items  
4.8. Over the past two years, India's food inflation rate has remained firm, diverging 
from global trends of stable or declining food inflation. This can be attributed to factors 
such as supply chain disruptions exacerbated by extreme weather events and reduced 
harvest of some food items.
4.9. Food inflation, measured by the CFPI, faced pressures in FY25 (April-December), 
primarily driven by a few food items such as vegetables and pulses. Vegetables and pulses 
together holds a total weightage of 8.42 per cent in CPI basket. However, their contribution 
to the overall inflation stood at 32.3 per cent in FY25 (April to December). When these 
items are excluded, the average food inflation rate for FY25 (April-December) was 4.3  
per cent, which is 4.1 per cent lower than the overall food inflation. Similarly, the average 
headline inflation would be 3.2 per cent when the vegetables and pulses inflation rate 
were excluded, 1.7 per cent lower than the actual headline inflation.
Chart IV.5: Food inflation driven by vegetables and pulses 
0
2
4
6
8
10
12
14
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Per cent
Monthly Inflation Rate (%)
FY24
FY25 (April-Dec)
-15 -5 5 15 25
Spices
Oils & fats
Milk items
Sugar
Meat & fish
Egg
Fruits
Cereals
Pulses
Vegetables
Per cent
Inflation rate(%) in food item s
FY24
FY25 (April-Dec)
Source: Consumer Price Indices released by CSO, MoSPI