There is news of relief on the inflation front in the country. Retail inflation reached 2.1% in June 2025, which is the lowest level in the last six years. At the same time, the wholesale inflation rate was also -0.13%, which shows that prices have softened on a large scale. Now the question arises whether this will also affect the loan EMI of common people?
Why did retail inflation fall?
According to the National Statistical Office (NSO), there was a sharp decline in the prices of vegetables, pulses, meat-fish, cereals, milk and spices in June. Better monsoon and favorable comparative base further accelerated this decline. Retail inflation was 2.82% in May, while it was 5.08% in June last year.
Wholesale inflation also below zero
According to the data of the Ministry of Commerce, the Wholesale Price Index (WPI) based inflation was -0.13% in June. The main reason for this was the decline in the prices of food items, fuel and basic metals. Vegetable prices fell by up to 19%.
Will there be an impact on EMI?
The fall in inflation has given the Reserve Bank of India (RBI) another opportunity to cut interest rates. Experts believe that a 25 to 50 basis point cut in the repo rate is possible in the Monetary Policy Committee (MPC) meeting to be held in August. This can provide relief in EMI of home loans, auto loans and other loans.
RBI policy so far
RBI has cut the repo rate three times so far in 2025 in February, April and June. Overall, there has been a cut of 1%, bringing the repo rate to 5.5% now. In the last meeting, RBI declared its policy “neutral”, due to which further cuts are likely.
What’s next?
The August meeting will take place before the July inflation data, and it is estimated that inflation may remain below 3% in July as well. In such a situation, it will be easier for RBI to cut interest rates, due to which the general public can get further relief in EMI.