ECONOMY
CPI inflation slips to a 7-month low of 3.61%, raises hopes of RBI rate cut
- IBJ Bureau
- Mar 13, 2025
Retail inflation slipped to a seven-month low of 3.61 per cent in February mainly due to easing prices of vegetables, eggs and other protein-rich items. The drop in Consumer Price Index (CPI)-based inflation creates space for the RBI to go for another cut in interest rate in April.
The central bank is scheduled to announce the next set of bi-monthly monetary policy on April 9.
The CPI-based retail inflation was at 4.26 per cent in January and 5.09 per cent in February 2024. The previous low was witnessed in July 2024.
The CPI has been in the comfort zone of the RBI since November 2024.
“There is a decline of 65 basis points in headline inflation of February 2025 in comparison to January 2025. It is the lowest year-on-year inflation after July 2024,” the National Statistics Office (NSO) said while releasing the CPI.
Year-on-year food inflation for February 2025 was 3.75 per cent.
“A sharp decline of 222 basis points is observed in food inflation in February 2025 in comparison to January 2025. The food inflation in February 2025 is the lowest after May 2023,” the NSO said.
A significant decline in headline inflation and food inflation during February has been mainly attributed to decline in inflation of vegetables, egg, meat and fish, pulses and products and milk and products.
Key items having lowest year-on-year inflation in February were ginger (-35.81 per cent), jeera (-28.77 per cent), tomato (-28.51 per cent), cauliflower (-21.19 per cent) and garlic (-20.32 per cent).
On the other hand, top items with highest inflation were coconut oil (54.48 per cent), coconut (41.61 per cent), gold (35.56 per cent), silver (30.89 per cent) and onion (30.42 per cent).
ICRA Chief Economist Aditi Nayar said that the CPI inflation declined sharper than expected to a seven-month low, appreciably below the mid-point of the RBI’s Monetary Policy Committee’s medium-term target range, led by a welcome cooling in food inflation.
“However, we believe that the sequential uptick in vegetables inflation in March 2025 is likely to prevent a further softening in the food and beverages inflation print in the month after the substantial cooling seen over the past four months,” she added.
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