India’s retail inflation eased to 4.31% in January 2025, marking a decline from 5.22% in December, as food prices moderated. The figure came in lower than the Reuters poll estimate of 4.6%, bringing inflation closer to the mid-point of the Reserve Bank of India’s (RBI) target range of 2-6%.
Meanwhile, India’s industrial output growth slowed to 3.2% year-on-year in December 2024, compared to 5.2% in November, indicating some moderation in economic activity.
Key Highlights:
- Retail inflation (CPI) fell to 4.31% in January from 5.22% in December.
- Industrial output growth slowed to 3.2% in December from 5.2% in November.
- Food inflation in December stood at 8.39% YoY, with rural inflation at 8.65% and urban inflation at 7.90%.
- Rural inflation (December): 5.76%
- Urban inflation (December): 4.58%
RBI’s CPI Inflation Forecast:
The RBI maintained its CPI inflation forecast at 4.8% for FY25, with a projected decline to 4.4% in Q4FY25. For FY26, inflation is estimated at 4.2%, with the following quarterly projections:
- Q1FY26: 4.5% (earlier 4.6%)
- Q2FY26: 4.0% (unchanged)
- Q3FY26: 3.8%
- Q4FY26: 4.2%
The easing inflation is a positive sign for Indian households and will be welcomed by the RBI, which recently cut the repo rate by 25 basis points to 6.25% to boost economic growth.
