India’s retail inflation drops to five-month low in January

India’s retail inflation eased to a five-month low of 4.31% in January, down from 5.22% in December 2024, primarily driven by a slowdown in food price increases. Food inflation moderated to 6% from 8.4% in the previous month, marking its slowest rise since August 2024, according to data released by the National Statistics Office (NSO). The inflation rate for urban consumers witnessed a sharp decline to 3.87%, slipping below the Reserve Bank of India’s (RBI) median target of 4%,according to information. Meanwhile, rural inflation stood at 4.64%, remaining above the 4% mark but significantly lower than December’s 5.8%.
Food inflation trends showed divergence between urban and rural areas. In cities, food prices increased by 5.5%, whereas rural areas saw a higher inflation rate of 6.3%. The NSO reportedly attributed the decline in overall headline inflation and food inflation to a moderation in the prices of vegetables, eggs, pulses, cereals, education, clothing, and healthcare.
Despite the overall decline, certain essential commodities continued to witness steep price increases. The five items that recorded the highest inflation in January included coconut oil (54.2%), potato (49.6%), coconut (38.7%), garlic (30.7%), and peas (30.2%).
On a month-on-month basis, the Consumer Price Index (CPI) for January registered a decline of 0.97%, while the Consumer Food Price Index (CFPI) eased by 2.9%, reflecting a broad-based cooling of price pressures across key segments, according to information.
The significant moderation in inflation offers some relief to policymakers and consumers alike, with analysts expecting the trend to influence the Reserve Bank of India's monetary policy stance in the coming months.

(Business Correspondent)