New Delhi: Data published by the National Statistical Office (NSO) on Wednesday revealed India’s retail inflation decreased to a seven-month low of 3.6 as food prices slumped dramatically. With the notable decline from 4.3% in January, predictions are that the Reserve Bank of India (RBI) would lower interest rates in April. With the inflation rate falling below 4% in almost a dozen states, the decrease in inflation was attributable to the pricing pressures relaxing throughout most of the states.
With its inflation rate rising to 7.31%—far beyond the RBI’s 4% tolerance limit—Kerala was the outlier. At 8.01%, inflation in rural Kerala was more severe than the floor average in metropolitan areas, 5.94%. Analysts noted that had Kerala’s inflation been more in line with the national level, the total count would have been smaller as it was well above the average. Conversely, Telangana recorded the lowest inflation at 1.31% and in rural areas of 0.49%.
Helped by an urban inflation rate of 1.48%, Delhi came in second at 1.51%. After Chhattisgarh, Karnataka (4.5%), Bihar (4.5%), and Jammu & Kashmir (4.3%) trailed. Andhra Pradesh, too, stayed at 2.4%, lowest.
In 13 of the 22 states under analysis, inflation falls below the RBI’s 4% objective. Although the figure for February falls within a broader general cooling trend, historical analysis reveals that this is only the third time in five years—60 months—that inflation has dropped to below 4%.
Those earlier events occurred in August 2023 at 3.65% and in July at 3.60%. Reduced prices for eggs, veggies and protein-based foods helped explain the dip in February. Also falling 65 basis points over January was the core inflation—that of sans food and fuel.
The lowest since May 2023, food inflation dropped 3.75% year over year, the NSO said. According to economists, this consistent moderation could provide the RBI justification for contemplating rate reductions for the next monetary policy review.