We evaluated the usefulness of RET-Y and RBC-Y in distinguishing functional iron deficiency from iron-deficiency anaemia (IDA) in patients with anaemia of inflammation (AI). Sixty healthy blood donors constituted the control group. We studied RET-Y and RBC-Y in 115 patients with hypochromic/microcytic anaemia. Of these 42 patients had uncomplicated IDA and 73 had AI. The AI patients were further subdivided into AI with IDA and AI with functional IDA based on soluble transferrin receptor (sTfR) levels. The mean RBC-Y and RET-Y values in iron-deficient patients were 122.4 and 119.8, respectively, which were significantly lower than the control (P < 0.001). The mean level of RET-Y in patients with AI associated with IDA was 149.3 and this level in AI patients with functional iron deficiency was 147.4. RET-Y levels in both subgroups of AI patients were significantly lower than control but no significant difference was observed between the two subgroups. Similar findings were observed for RBC-Y. Receiver operating characteristic analysis also showed lower specificity for RBC-Y and RET-Y compared with that of sTfR and its log ferritin ratio (F-index). RET-Y and RBC-Y are useful in the diagnosis of simple IDA but have limited utility in the diagnosis of IDA with AI.