India's Retail Inflation Declines to 4.31% in January
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Synopsis
India's retail inflation, based on the Consumer Price Index, fell to a five-month low of 4.31% in January, providing relief to households as prices of vegetables and pulses decreased. This is part of a downward trend from a high of 6.21% in October, as reported by the Ministry of Statistics.
Key Takeaways
- Inflation Rate: 4.31% in January.
- Food Inflation: 6.02%, lowest since August 2024.
- Major Contributors: Price drops in vegetables, eggs, and cereals.
- Policy Rate Cut: RBI reduced from 6.5% to 6.25%.
- Future Outlook: Continued downward trend expected.
New Delhi, Feb 12 (NationPress) The retail inflation rate in India, calculated using the Consumer Price Index, has dropped to a five-month low of 4.31 percent in January, thanks to a reduction in prices of vegetables and pulses, providing relief to household finances, as per the data released by the Ministry of Statistics on Wednesday.
This decrease in inflation represents a consistent downward trend, following a peak of 6.21 percent in October. The CPI inflation saw a reduction to 5.48 percent in November and 5.22 percent in December.
Food inflation in January 2025 stands at 6.02 percent, marking the lowest rate since August 2024.
According to an official statement, the notable reduction in both headline inflation and food inflation for January is primarily due to lower prices in categories such as vegetables, eggs, pulses, cereals, education, clothing, and health.
The five items with the highest year-on-year inflation at the national level in January include coconut oil (54.20 percent), potato (49.61 percent), coconut (38.71 percent), garlic (30.65 percent), and peas (vegetables) (30.17 percent).
Conversely, the items with the lowest year-on-year inflation in January 2025 feature Zeera (-32.25 percent), ginger (-30.92 percent), dry chillies (-11.27 percent), brinjal (-9.94 percent), and LPG (excluding conveyance) (-9.29 percent).
The inflation rate for fuel and light in January is -1.38 percent, compared to -1.33 percent in December 2024, as fuel prices continue to decline.
On Friday, RBI Governor Sanjay Malhotra announced a 25 basis point cut in the policy rate from 6.5 percent to 6.25 percent during the monetary policy review, aimed at stimulating growth amidst global uncertainties.
He noted that inflation has decreased and is anticipated to further moderate, aligning with the RBI’s targets.
This monetary policy decision strikes a careful balance between managing inflation and boosting growth in a slowing economy.
The Monetary Policy Committee (MPC) also unanimously agreed to maintain a neutral stance in monetary policy, focusing on inflation while supporting growth, allowing flexibility to adapt to the macroeconomic landscape, as stated by Malhotra.
With retail inflation continuing its downward trajectory, the RBI is expected to have more latitude to adopt a softer monetary policy, facilitating increased credit availability for businesses and consumers, which will drive economic growth.
