India’s retail inflation, measured by the Consumer Price Index (CPI), fell to a seven-month low of 3.61% in February, marking a 0.65% decline from January. The drop was largely driven by a further reduction in food prices, making it the lowest inflation rate recorded since July 2024.
According to official data, food inflation in February reached its lowest level since May 2023, showing a 222-basis-point decline compared to January. The decline in overall and food inflation was primarily due to lower price increases in vegetables, eggs, meat & fish, pulses, and dairy products.
Among key items, ginger (-35.81%), jeera (-28.77%), tomato (-28.51%), cauliflower (-21.19%), and garlic (-20.32%) recorded the most significant year-on-year price drops in February. Additionally, fuel prices declined, with inflation in this category recorded at (-)1.33%, easing financial pressure on households.
With retail inflation now below the Reserve Bank of India’s (RBI) target level of 4%, the central bank has more flexibility to consider rate cuts to stimulate economic growth and job creation.
Last month, RBI Governor Sanjay Malhotra announced a 25-basis-point reduction in the policy rate, lowering it from 6.5% to 6.25% in response to global economic uncertainties. He stated that inflation is expected to continue moderating and gradually align with the RBI’s 4% target.
The Monetary Policy Committee (MPC) reaffirmed its neutral stance, aiming to balance inflation control with economic growth. This approach provides the flexibility needed to navigate the evolving macroeconomic environment, Malhotra added.
