India's retail inflation rate dropped to 1.55% in July 2025, marking its lowest level since June 2017 and falling below the Reserve Bank of India's target for the first time in eight years. This decline was primarily driven by a sharp fall in food and beverage prices, which contributed a negative 5.07 percentage points year-on-year change. Despite this overall cooling, prices of edible oils surged at a pace not seen since the onset of the Russia-Ukraine conflict in early 2022. Concurrently, India's wholesale inflation rate fell to -0.58% year-on-year in July, reaching a two-year low and indicating deflation for the second consecutive month. The decline in wholesale prices was mainly due to decreases in food and fuel costs, although prices for manufactured goods showed some acceleration. The easing inflation provides the Reserve Bank of India with potential room to reduce interest rates but raises concerns about possible income shocks in rural areas.