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    Question

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

    Price Index (CPI) inflation dropped to what level in May 2025, marking a six-year low?  
    A 3.5% Correct Answer Incorrect Answer
    B 2.8% Correct Answer Incorrect Answer
    C 4.0% Correct Answer Incorrect Answer
    D 3.0% Correct Answer Incorrect Answer
    E 2.5% Correct Answer Incorrect Answer

    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.  

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