As per the July 2025 FSR, India’s domestic Consumer

Solution

Explanation:  
The FSR points out that domestic CPI inflation fell to 2.8% in May 2025 , which is the lowest in six years.  

• This sharp decline demonstrates price stability and easing of demand-side as well as supply-side pressures.  
• Inflation at 2.8% falls below the RBI’s medium-term target of 4% (with tolerance band 2–6%), reflecting a disinflationary trend.  
• Contributing factors include lower food and fuel price pressures, softer global commodity prices due to slower international growth, and strong domestic supply chains.  
• However, the report also cautions that imported inflation risks remain due to uncertainties like Middle East tensions.