New Delhi, March 12— Retail inflation in India fell to 3.61% in February, the lowest in seven months, driven by a decline in food prices, government data showed on Wednesday. The drop of 65 basis points from January’s 4.26% has created room for a potential interest rate cut by the Reserve Bank of India (RBI) next month.
The National Statistics Office (NSO) reported that consumer food inflation dropped by 222 basis points in February, bringing the All India Consumer Food Price Index (CFPI) to a year-on-year rate of 3.75%. “Food inflation in February 2025 is the lowest since May 2023,” the NSO stated.
The easing inflation trend was particularly evident in rural areas, where the Consumer Price Index (CPI) declined from 4.59% in January to 3.79% in February. Food inflation in these regions saw a sharper fall, from 6.31% to 4.06%. In urban areas, CPI inflation dropped from 3.87% to 3.32%, while food inflation fell from 5.53% to 3.2%.
The NSO attributed the overall decline to lower inflation in vegetables, eggs, meat, fish, pulses, and dairy products. However, sector-specific data showed mixed trends.
Housing inflation edged up to 2.91% from 2.82% in January, while fuel and light inflation remained negative at -1.33%, though slightly improving from -1.49%. Education inflation remained steady at 3.83%, and health inflation rose marginally to 4.12% from 3.97%. Transport and communication inflation increased slightly to 2.87% from 2.76%.
With inflation easing, the RBI, which targets a 4% retail inflation rate within a +/-2% range, cut the repo rate by 25 basis points in February. The central bank is set to announce its next monetary policy decision on April 9.