In February 2025, the Consumer Price Index (CPI) inflation rate in India is estimated to have fallen below 4%, marking a significant decline from previous months. This drop is attributed to a decrease in food prices, particularly for kitchen essentials like tomatoes and potatoes. If this estimate holds true, it would be the first time in six months that inflation has dipped to a level within the Reserve Bank of India’s acceptable range.
Official data on the consumer price index-based inflation for February 2025 is set to be released on March 12. This data will be crucial as it will be the final retail inflation report before the RBI’s Monetary Policy Committee convenes for its bi-monthly policy review in April.
In January, retail inflation stood at 4.25%, with food inflation at 5.22%. The last time CPI inflation was below 4% was in August 2024 when it recorded 3.65%. The recent dip in inflation is a positive sign for the economy, especially amidst concerns over rising prices and their impact on consumer spending.
### Expert Insights: Economists Weigh In
Many economists predict that CPI inflation has continued to ease in February. According to Crisil’s Roti Rice Plate, the cost of a vegetarian thali, a typical Indian meal, decreased year-on-year due to lower tomato prices. On the other hand, the cost of a non-vegetarian thali saw a slight increase, mainly due to rising broiler prices. These fluctuations reflect the ongoing changes in food prices and their influence on overall inflation.
The monthly indicator of food plate costs revealed that both vegetarian and non-vegetarian thalis decreased by 5% in February. This decline was attributed to reductions in onion, potato, and tomato prices, driven by increased supply. Additionally, broiler prices dropped by an estimated 5% due to reduced demand amid concerns over avian flu in southern India.
### Projections and Analysis
A report from Union Bank of India suggests that CPI likely slowed down further to 3.94% in February 2025 compared to 4.31% in January. This deceleration is primarily due to the continued easing of vegetable prices, particularly for onions, potatoes, and tomatoes. Food inflation is expected to have fallen below 5% in February, indicating a positive trend for consumers.
On the other hand, Bank of Baroda estimates retail inflation in February at 4.1%. The decline in vegetable prices, especially tomatoes and potatoes, along with stable pulse prices, contributed to this moderation. Additionally, reductions in milk prices further assisted in curbing inflation. The steady energy prices also played a role in preventing global commodity price fluctuations from significantly impacting inflation rates.
In conclusion, the recent dip in CPI inflation in India is a welcome development that aligns with the government’s efforts to control rising prices and support economic growth. As we await the official data release for February, experts remain optimistic about the downward trend in inflation. The coming months will reveal whether this trend continues and how it shapes the country’s monetary policies and consumer spending patterns.
