Lowest CPI inflation since series began at 1.7%! How did India achieve this, reveals Economic Survey

The Economic Survey 2025–26 highlights a historic milestone for India’s economy: the country recorded an average retail inflation of 1.7 per cent between April and December 2025, marking the lowest rate since the Consumer Price Index (CPI) series began. This unprecedented moderation in prices has been achieved amidst a complex global economic environment and reflects the effectiveness of India’s macroeconomic management.

The Survey situates India’s performance in the broader global context, noting that inflation has moderated across advanced, emerging, and developing economies. Global headline inflation declined from 8.7 per cent in 2022 to 4.2 per cent in 2025. Advanced economies stabilised at 2–3 per cent, while emerging market and developing economies reduced inflation from 9.7 per cent to 5.3 per cent. This shows that India’s disinflationary trajectory aligns with, but is even sharper than, global trends.

Over the past four years, India’s retail inflation, as measured by Consumer Price Index (CPI), has followed a steady downward path, from 6.7 per cent in FY 2022–23 to 1.7 per cent in FY 2025–26 (up to December). The pace of decline accelerated in the current fiscal year, with inflation averaging 4.6 per cent in FY 2024–25. April–December 2025, therefore, represents the lowest average CPI inflation recorded in the series, highlights the report.

The Survey attributes this disinflation to multiple structural and cyclical factors. Strong supply-side management, moderation in global commodity prices, and effective domestic policy interventions contributed to containing price pressures. Additionally, resilient agricultural output and efficient food distribution systems helped stabilise essential commodity prices.

According to the IMF, India recorded an inflation rate of 2.8 per cent over a comparable period, while China experienced price stagnation. This underscores India’s relative success in maintaining low and stable inflation, even as global uncertainties persisted.

Sustained low inflation supports household purchasing power, strengthens investor confidence, and provides the Reserve Bank of India with flexibility in monetary policy. It also creates a conducive environment for continued economic growth, especially in a period of global volatility. The 1.7 per cent CPI average in April–December 2025 is more than a statistic; it represents a structural achievement in India’s economic management.