The Business Bytes
THEBUSINESSBYTES BUREAU
NEW DELHI, MARCH 12, 2025
India’s retail inflation, measured by the Consumer Price Index (CPI), eased to a seven-month low of 3.61% in February, marking a significant decline of 0.65 percentage points from January’s inflation rate. This is the lowest level recorded since July 2024, primarily driven by falling food prices.
According to official data, food inflation in February reached its lowest level since May 2023, registering a 222-basis point decline compared to January. The downward trend in headline and food inflation is largely attributed to reduced inflation rates in vegetables, eggs, meat and fish, pulses, and dairy products.
Key food items that witnessed the most significant price reductions in February include ginger (-35.81%), jeera (-28.77%), tomato (-28.51%), cauliflower (-21.19%), and garlic (-20.32%). This substantial decrease in food prices has provided much-needed relief to households.
Additionally, fuel prices saw a decline, helping ease the burden on household budgets. Inflation in the fuel segment was recorded at (-)1.33% in February, reflecting a notable drop in energy costs.
With retail inflation now below the Reserve Bank of India’s (RBI) target of 4%, the central bank is expected to have greater flexibility in implementing rate cuts to stimulate economic growth and employment. In its latest monetary policy review, RBI Governor Sanjay Malhotra announced a 25-basis-point reduction in the policy rate, bringing it down from 6.5% to 6.25% to support economic expansion amid global uncertainties.
Governor Malhotra stated that inflation is on a downward trajectory and is anticipated to gradually align with the RBI’s 4% target. The monetary policy decision seeks to strike a balance between inflation control and boosting economic growth in a slowing global economy.
The Monetary Policy Committee (MPC) also unanimously decided to maintain a neutral stance in its policy approach, emphasizing inflation control while supporting growth. This strategy is aimed at ensuring macroeconomic stability while allowing the RBI to respond effectively to evolving economic conditions.
