Retail inflation slows to 5 months low to 4.31 % in January

Retail enlargement in India slowed down to its lowest level in five months in January, driven by a slowdown in food inflation. The annual retail rate in January was 4.31 %, less than economists’ prediction by 4.6 % and a decrease of 5.22 % in December.

The Ministry of Statistics and the implementation of the program said on Tuesday: “There is a decrease in 91 basis points in the main inflation in January 2025 compared to December 2024. It is the lowest level of inflation on an annual basis after August 2024.” In August 2024, a 3.65 % retail rate was recorded.

Food inflation fell to 6.02 % of 8.39 % in December. This reduction in inflation raises the possibility of reducing the monetary policy by the Indian Reserve Bank (RBI), which reduced the main policy in February for the first time in almost five years to stimulate the economy. The government also made significant discounts in income tax on the February 1 budget to enhance consumption.

In January, vegetable prices increased by 11.35 % on an annual basis, compared to an increase of 26.60 % in December. The prices of pills increased by 6.24 %, compared to a rise of 6.50 % in December, while beans saw a profit of 2.59 % compared to 3.80 %. The prices of vegetables and legumes decreased from the previous month. Winter harvest contributed to the supervision of food prices, although the warmer temperatures than usual in March may threaten crops such as wheat.

Basic inflation, with the exception of food and volatile energy and considered a better measure of home demand, increased to 3.7 % in January from 3.6 % in December, according to the measurement of two economists.

The ruler of RBI Sanjay Malhotra said last week that the central bank is still vigilant in inflationary pressure and will monitor the impact of the decrease in the value of the rupee on local prices. He pointed out that the low value of 5 % in the rupee affects local inflation by 30 to 35 basis points. Fears regarding a potential trade war pushed a record of 87.95 against the US dollar in February, which increased fears of inflation on imported goods.

RBI is expected to inflation to an average of 4.8 % in the current fiscal year ending March 31 and expects to decrease to 4.2 % the following year. The central bank aims to 4 % inflation with the tolerance bar of 2 percentage points on both sides.