India’s Retail Inflation Eases To 7-Month Low Of 3.6% In February

India’s retail inflation based on the Consumer Price Index (CPI) eased to a 7-month low of 3.61% in February. This is 0.65% lower than the January figure, according to government data released on Wednesday.

Lower food prices caused the decline in inflation. Food prices have come down to the lowest level since May 2023 and are 222 basis points lower than in January.

Falling prices of vegetables, eggs, meat & fish, pulses, and milk & products reduced headline inflation.

The key items driving the price drop in February are ginger (-35.81%), jeera (-28.77%), tomato (-28.51%), cauliflower (-21.19%), and garlic (-20.32%), according to official data.

Lower Inflation May Lead To Rate Cuts

Retail inflation has fallen below the RBI’s targeted level of 4%. This gives the central bank more room to cut rates and boost growth and jobs.

RBI Governor Sanjay Malhotra announced a 25 basis point repo rate cut from 6.5% to 6.25% in last month’s monetary policy review. This aims to accelerate economic growth amid global uncertainties.

Malhotra said inflation has declined and should gradually align with the RBI’s 4 percent target.

The monetary policy aims to balance inflation control with economic growth. Global issues like Trump’s tariff war and the Russia-Ukraine conflict have slowed the economy.

The MPC unanimously decided to maintain a neutral stance on monetary policy. Malhotra said this approach gives flexibility to respond to the macroeconomic environment.

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