Historic Drop in Inflation: India’s Prices Fall to 77-Month Low as Jobs and Exports Surge

India’s economy has started the financial year 2025-26 on a strong note, with inflation falling sharply, jobs increasing, and exports showing positive growth. According to the Monthly Economic Review for June 2025, retail inflation based on the Consumer Price Index dropped to just 2.1 percent in June. This is the lowest level recorded in the past 77 months, or over six years.

The drop in inflation has come mainly from falling food prices, especially vegetables and pulses. Food inflation actually turned negative in June, which means that food prices were lower than they were one year ago.

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A good monsoon and higher agricultural output have helped improve food supply and bring prices down. Rural inflation, which had been higher than urban inflation for some time, is now also lower.

At the same time, India’s job market is showing strong improvement. The Employees’ Provident Fund Organisation (EPFO) reported its highest-ever net addition of members in May 2025. This means that more people are joining formal jobs and are being covered by social security benefits.

Young workers aged 18 to 25 formed the largest group of new job-seekers. There was also a noticeable increase in the number of women joining the workforce.

Exports are also rising. India’s total exports of goods and services grew by 5.9 percent in the first quarter of the financial year. Core merchandise exports, which exclude oil and jewellery, rose by 7.2 percent.

Services exports, including IT and business services, showed particularly strong growth. This helped reduce the trade deficit, even as global conditions remained uncertain due to events like conflicts in the Middle East and changes in oil prices.

The Indian rupee remained stable during this period, with low volatility in June. Foreign exchange reserves also stayed strong, giving confidence to markets.

On the tax front, government revenues continue to grow. Gross tax collections rose by over 12 percent compared to the same period last year. Income tax and Goods and Services Tax (GST) both recorded steady growth. These strong revenues helped the government maintain its investment in infrastructure while reducing the fiscal deficit to 4.77 percent of GDP in 2024–25.

With low inflation, rising employment, improved tax collections, and strong exports, India’s economic outlook remains positive heading into the next quarter.

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