India’s CPI Inflation Drops To 5-Month Low Of 4.31% In January

India’s retail inflation, based on the Consumer Price Index (CPI), eased to 4.31% in January, marking a five-month low. This decline was driven by a drop in vegetable and pulse prices, which relieved household budgets.

The January inflation rate continues a steady decline from a peak of 6.21% in October 2024. It fell to 5.48% in November and 5.22% in December. Food inflation, a key driver, dropped to 6.02% in January—the lowest since August 2024.

The reduction in inflation was primarily due to price decreases in vegetables, eggs, pulses, cereals, clothing, and health-related services.

Also Read: Indian Stock Market Opens Lower Amid Concerns Over Trump’s Tariff Threats

However, some items saw a significant year-on-year price increase. Coconut oil surged by 54.2%, followed by potatoes at 49.6%, and coconut at 38.7%. Garlic and peas also saw inflation at 30.65% and 30.17%, respectively.

On the other hand, the lowest inflation was recorded for zeera (-32.25%), ginger (-30.92%), and dry chillies (-11.27%). Fuel and light inflation stood at -1.38%, slightly lower than the previous month.

The Reserve Bank of India (RBI) has responded by cutting its policy rate by 0.25% to 6.25% to support growth amid global uncertainty. Governor Sanjay Malhotra explained that inflation has eased and is expected to continue moderating, aligning with the RBI’s target.

With inflation under control, the RBI’s decision to maintain a neutral stance allows more flexibility to support growth while monitoring inflation closely. This shift paves the way for easier credit, encouraging businesses and consumers to drive economic expansion.