The inflation of the retail sale of India has slowed down a hollow of five months in January, driven by a slowdown in inflation of food prices. The annual detail inflation rate in January was 4.31%, below the prediction of economists by 4.6% and a decrease of 5.22% in December.
“There is a drop of 91 basic points in chief inflation in January 2025 compared to December 2024. This is the lowest inflation in annual shift after August 2024,” said the ministry on Tuesday statistics and program. In August 2024, the retail inflation rate was recorded at 3.65%.
Food inflation decreased to 6.02% against 8.39% in December. This reduction in inflation increases the possibility of additional softening of monetary policy by the reserve Bank of India (RBI), which had reduced its key policy in February for the first time in almost five years to stimulate the ‘economy. The government has also introduced significant income tax cuts into the budget of February 1 to increase consumption.
In January, vegetable prices increased by 11.35% in annual sliding, against an increase of 26.60% in December. Cereal prices increased by 6.24% against an increase of 6.50% in December, while pulses experienced 2.59% against 3.80%. The prices of vegetables and legumes fell from the previous month. Winter harvests have helped moderate food prices, although warmer temperatures than usual in March can threaten crops like wheat.
Basic inflation, excluding volatile foods and energy elements and considered a better measurement of domestic demand, increased to 3.7% in January, against 3.6% in December, according to two economists.
RBI Governor Sanjay Malhotra said last week that the central bank remains vigilant with regard to inflationary pressures and would monitor the impact of the damping of Roupie on local prices. A depreciation of 5% in the Roupie affects internal inflation from 30 to 35 base points, he noted. Concerns about a potential trade war led the rupe to reach a record hollow of 87.95 compared to the US dollar in February, which increases fears of increased inflation on imported goods.
The RBI provides that inflation on average 4.8% during the current financial year ending on March 31 and expects it to decrease to 4.2% the following year. The central bank aims for an inflation target of 4% with a strip of tolerance of 2 percentage points on each side.
