India’s retail inflation drops to 3.61% in February, lowest in seven months

Retail Inflation Falls to 3.61% in February, Providing Relief to Consumers

India’s consumer price index (CPI)-based inflation fell to 3.61% in February 2025, its lowest level in seven months, compared to 4.31% in January. The decline was mainly driven by moderation in food prices, stable fuel costs, and improved supply conditions.

Key Drivers Behind the Decline

1. Food Inflation: Prices of essential food items such as cereals, vegetables, and dairy declined after witnessing a spike in previous months.
2. Fuel and Energy: Global crude oil prices remained stable, contributing to reduced fuel inflation.
3. Core Inflation: The core inflation (which excludes volatile food and fuel prices) also moderated, indicating broader price stability across goods and services.

Sector-Wise Impact

• Food & Beverages: Inflation in this category softened due to lower vegetable and cereal prices.
• Housing: Rental inflation remained stable with marginal increases in urban areas.
• Fuel & Light: The government’s measures to control energy prices helped stabilize this segment.

Economic Outlook & RBI’s Next Move

With inflation easing toward the Reserve Bank of India’s (RBI) target of 4%, analysts predict a potential shift in monetary policy. The RBI has kept interest rates unchanged for several months, prioritizing inflation control while balancing economic growth.

If inflation remains below 4% in the coming months, the central bank may consider rate cuts to stimulate demand and investment.