High Inflation Before 2014 Eroded Purchasing Power: Centre

The government data released on Wednesday highlighted the stark contrast with the previous decade as India’s retail inflation eased to a six-year low in March. Between 2004–05 and 2013–14, the country witnessed an average annual inflation rate of 8.2 per cent, underscoring a period of significant price volatility. During this time, households across India grappled with sharp increases in food and fuel costs, which placed a heavy burden on everyday expenses.

The Ministry of Finance noted that the period from 2009–10 to 2013–14 was particularly challenging, with inflation consistently remaining in double digits. This prolonged phase of high inflation eroded consumer purchasing power and created a difficult economic environment for both families and businesses, affecting savings, investment sentiment, and overall economic stability.

"In sharp contrast, the 10-year period from 2015–16 to 2024–25 witnessed a marked decline in inflationary pressures, with the average rate coming down to 5 per cent," the ministry said in its statement. This sharp decline in inflation highlights the combined efforts of the government and the Reserve Bank of India (RBI) to maintain price stability, driven by improved supply-side measures, disciplined fiscal management, and a focused inflation-targeting monetary policy framework.

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Stable Pricing Environment

"The shift from a high-inflation era to a more stable pricing environment has provided greater certainty for consumers and strengthened the foundation for long-term economic growth," the ministry noted.

The consistent decline in retail inflation in recent years represents a significant milestone in India’s economic trajectory, underscoring the effectiveness of the government’s coordinated strategy. Through a blend of proactive monetary policy and targeted fiscal interventions, the efforts have not only curbed price volatility but also provided crucial protection to vulnerable sections of society.

"With inflation now at its lowest since 2018–19, India has not only reinforced macroeconomic stability but also created an enabling environment for sustainable growth. This trajectory underscores the country’s resilience and commitment to ensuring price stability without compromising on development goals," the ministry highlighted.

Retail inflation in India, measured by the Consumer Price Index (CPI)—a key indicator of the cost of everyday goods and services—fell to 4.6 per cent in FY 2024-25, marking its lowest level since FY 2018-19. Significantly, the year-on-year inflation rate for March 2025 eased further to 3.34 per cent, down by 27 basis points from February, making it the lowest monthly reading since August 2019.

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