Retail inflation at 5-month low of 4.31% in January on easing of key food prices

Retail inflation, based on the Consumer Price Index (CPI), fell to a five-month low of 4.31 per cent in January from 5.22 per cent in December, mainly due to a decline in prices of key food items, such as vegetables, data released by National Statistics Office on Wednesday showed.

Food inflation, based on the Consumer Food Price Index (CFPI), eased to a five-month low of 6.02 per cent in January from 8.39 per cent in December, the data showed. The inflation rate of vegetables eased to 11.35 per cent in January from 26.56 per cent in December, mainly due to improved supplies and seasonal factors. The decline in the inflation rate for vegetables is expected to continue for the next couple of months leading to inflation in February and March 2025 to be in the 3.9-4.0 per cent range, said India Ratings and Research (Ind-Ra) in a note.

Within the food basket, inflation in cereals  and pulses moderated on a y-o-y basis in January, while inflation in oils & fats rose in January.

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Last week, the Reserve Bank of India (RBI) after a gap of five years cut the policy repo rate by 25 basis points to 6.25 per cent. In view of easing price pressures, experts expect the RBI to undertake another 25 basis points cut in April. As such, the monetary policy action in April 2025 will depend on currency movement and liquidity in the system. Future pol-icy easing would be data dependent, say experts.

Core inflation, the non-food, non-fuel segment, inched up to 3.7 per cent in January from 3.6 per cent in December.