New Delhi: India’s retail inflation rate slipped to 4.31% in January 2025, its lowest in five months. Prices of vegetables, eggs and pulses contributed the most to this decrease. Retail inflation stood at 5.22 per cent in December 2024 and 5.1 per cent in January 2024. This was the first time since August 2024 that the rate had fallen below 4% when it dropped to 3.65%. The food basket inflation rate was 6.02 per cent in January 2025, the lowest since August 2024, when the number was 5.66 per cent.
Consumer price inflation eased to 4.85 per cent in January 2025, down 91 basis points from December 2024, its slowest since August 2024, as per National Statistical Office (NSO) data. According to NSO data, the top five inflation items based on annual rate were coconut oil (54.2%), potatoes (49.61%), coconuts (38.71%), garlic (30.65%), and peas (30.17%). On the other hand, cumin (-32.25%), ginger (-30.92%), dried chillies (-11.27%), eggplant (-9.94%) and LPG (9.29%) had the lowest inflation rates.
Inflation in both rural and urban areas fell. For rural areas, the inflation rate for January was 4.64%, compared to 5.76% in December 2024. The food inflation figure for rural areas was 6.31% in January, down from 8.65% in December. The first hike came in January when the inflation rate declined to 3.87% in urban areas from 4.58% in December. Meanwhile, food inflation in urban areas fell to 5.53% in January and 7.9% in December. Nonetheless, the year-on-year housing inflation rate increased a little to 2.76 per cent in January.
In addition, the NSO said vegetables, eggs, pulses, cereals, other products under it, education, clothing, and health services also contributed to lower inflation. Five states had inflation above the national average in January — Kerala (6.76%), Odisha (6.05%), Chhattisgarh (5.85%), Haryana (5.1%) and Bihar (5.06%). Bihar had the highest inflation of 6.28%, and Delhi recorded the lowest inflation of 2.02%.
Last week, the Reserve Bank of India (RBI) reduced interest rates by 25 basis points for the first time in five years to revive growth. CPI-based five-year inflation expectations of the RBI are anchored at 4% with a tolerance range of 2%. CPI inflation cooled more than expected, mainly due to food items, according to ICRA Chief Economist Aditi Nayar.
She indicated that A possible 25 basis point rate cut during the April or June 2025 meeting is not out of the question. To understand the price trends, the NSO collects the price data from 1,114 urban markets and 1,181 villages across all states and union territories.