India’s retail inflation moderated to 8 year low of 1.55% in July, 2025. Measured by the All India Consumer Price Index (CPI), it shows the lowest year-on-year inflation rate after June, 2017. 

• Further, Year-on-Year inflation rate based on All India Consumer Food Price Index (CFPI) or Food Inflation stood at -1.76% in July 2025, lowest after January 2019. 

Reason for the Decline

• Favourable base effect: Refers to the impact of the corresponding reference year on current growth estimates. 
• Decline in inflation: In items like Pulses and Products, Transport and communication, Vegetables, Cereal and products, Education, etc. 

About CPI 

• Meaning: It the change over time in general level of prices of goods and services that households acquire for consumption. 
• Significance: Widely used macroeconomic indicator of inflation, tool for inflation targeting by governments and central banks, deflators in national accounts, indexing dearness allowance to employees. 
• Published by: Central Statistical Office (CSO) on 12^th of every month.
• Components: Includes 4 CPI numbers at the national level, namely:
  • CPI for Industrial Workers (IW),
  • CPI for Agricultural Labourers (AL), 
  • CPI for Rural Labourers (RL) and
  • CPI for Urban Non-Manual Employees (UNME).
• Base Year for CPI: 2012
• Comparison with Wholesale Price Index (WPI): WPI captures the inflation at the wholesale level, and differs with CPI in terms of their weighing patterns. 
  • Food has a larger weight in CPI while fuel group has greater weight in WPI. 

The Reserve Bank has granted ‘in-principle’ approval to AU Small Finance Bank for transitioning from a small finance bank (SFB) to a universal bank, for the first time in a decade.

• A Universal Banking Licence permits a financial institution to offer a wide array of banking services, including commercial and investment banking, under a single umbrella.
• Last time, the universal banking licences were granted in 2014 to Bandhan Bank and IDFC Bank, which later became IDFC First Bank.

Eligibility criteria for SFB to transition into a Universal bank:

• Status: Scheduled status for a minimum period of five years.
• Stock Listing: Shares of the bank should have been listed on a ecognized stock exchange.
• Net Worth: Having a minimum net worth of ₹1,000 crore.
• CRAR: meeting the prescribed CRAR requirements for SFBs
• Financial Health:
  • Profitability: Should have net profits in the last two Financial Years.
  • Asset Quality: Gross non-performing assets (G-NPA) and net NPA (N-NPA) must be less than or equal to 3% and 1%, respectively, over the last two FYs. 
• Promoter Requirements: No addition of new promoters or changes to existing promoters during the transition.
• Preference: SFBs with a diversified loan portfolio will be preferred.