New Delhi [India]: India’s retail inflation significantly eased in February 2025, with the Consumer Price Index (CPI) inflation rate dropping to 3.61%, marking a 65 basis point decline from the previous month. This is the first time in six months that inflation has fallen below the 4% mark, primarily driven by a decrease in vegetable prices.
According to Bank of Baroda economist Dipanwita Mazumdar, the improved inflation outlook offers potential for policy rate adjustments by the Reserve Bank of India (RBI).
“We do not see major risks lurking for food inflation. However, one needs to be vigilant on account of hotter than expected summer, stickier international edible oil prices, and risks from global inflationary policies,” Mazumdar stated.
The economist highlighted several positive factors contributing to the downward trend in inflation:
- Better Rabi harvest
- Improved supply chain management by the government
- Stable commodity prices
- Benign energy price outlook
- Reduced dependence on imported commodities in the CPI basket
Mazumdar projected CPI inflation to average 4.6% for the fiscal year 2024-25, with the final quarter’s figure expected to hover around 3.8%.
The February decline was largely credited to falling prices in key food categories like vegetables, eggs, meat and fish, pulses, and milk products — offering relief to households burdened by recent high living costs.
Despite persistent concerns about food prices, India’s inflation trajectory remains well-managed compared to global trends.
The RBI had maintained elevated repo rates to control inflation, and this latest data could provide room for potential policy easing in the coming months.