At 7-month low, retail inflation eases to 3.61% in February

Hitting a seven-month low, the country's retail inflation slipped to 3.61 per cent in February, marking a decline of 65 basis points from January, mainly due to the dip in the rate of price rise in vegetables and protein-rich items, creating space for the Reserve Bank of India for second reduction in interest rate next month, the government said on Wednesday.

Signalling a respite for consumers amid the challenging economic climate, this marks the lowest inflation level since July 2024.

Comparatively, the consumer price index-based retail inflation was at 4.26 per cent in January and 5.09 per cent in February 2024.

The data released by the National Statistics Office (NSO) revealed that the year-on-year inflation rate for February 2025 was 3.75 per cent.

It reflects a substantial easing of price pressures, particularly in the food sector.

It said a sharp decline of 222 basis points was observed in food inflation in February 2025 as compared to January 2025. Representing a sharp decline of 222 basis points compared to January 2025, the All India Consumer Food Price Index (CFPI) recorded a year-on-year inflation rate of 3.75 per cent in February 2025.

“The food inflation in February 2025 is the lowest after May 2023,” the NSO said.

“The significant decline in headline inflation and food inflation during February is mainly attributed to the decline in inflation of vegetables, egg, meat, and fish, pulses and products; and milk and products,” it said.

Showing varying impacts in rural and urban sectors, the inflationary trend revealed that both headline and food inflation saw a marked decrease in rural areas where the CPI inflation dropped from 4.59 per cent in January to 3.79 per cent in February, while food inflation in rural areas plummeted from 6.31 per cent to 4.06 per cent over the same period.

With urban headline inflation decreasing from 3.87 per cent in January to 3.32 per cent in February, the food inflation in urban areas saw an even steeper drop, from 5.53 per cent in January to 3.2 per cent in February, contributing to the overall slowdown in inflation.

However, the sector-specific inflation trends revealed mixed results for February.

While the housing inflation saw a slight rise to 2.91 per cent in February from 2.82 per cent in January, fuel and light inflation remained negative, at -1.33 per cent, though it showed a slight improvement from -1.49 per cent in January, according to the February data.

It showed that the education inflation remained stable at 3.83 per cent, while health inflation increased marginally to 4.12 per cent from 3.97 per cent in January. On the other hand, transport and communication inflation witnessed a modest rise to 2.87 per cent from 2.76 per cent. The price corrections have provided much-needed relief to households grappling with the high cost of living in recent months.

In February, the RBI, which has been mandated to ensure retail inflation remains at 4 per cent (+/- 2 per cent), has reduced the short-term lending rate (repo) by 25 basis points on easing concerns on the inflation front.

The RBI is scheduled to announce the next set of bi-monthly monetary policy on April 9.