CPI inflation may have been 4% or less in February 2025

Retail inflation is seen to have declined in February to 4% or even lower as food prices, including those of kitchen staples such as tomatoes and potatoes, eased last month. This would be the first time in six months when inflation eased to a level within the Reserve Bank of India’s tolerance zone.

Retail inflation was at 4.25% in January with food inflation at 5.22%. CPI inflation was at last at less than 4% in August 2024 when it came in at 3.65%.

Official data on consumer price index-based inflation for February 2025 will be released on March 12. This will also be the last set of retail inflation data to come in before the RBI’s Monetary Policy Committee meets for its bi-monthly policy review between April 7 and 9.

In its last policy meet, the MPC chaired by RBI Governor Sanjay Malhotra had cut the repo rate by 25 basis points to support slowing economic growth as inflation had become less of a concern.

Most economists estimate that CPI inflation has eased further in February this year. As per Crisil’s Roti Rice Plate, the cost of vegetarian thali declined on-year in February amid lower tomato price, while that of non-vegetarian thali inched up as runup in broiler price continued.

The monthly indicator of food plate cost estimated that the cost of a home-cooked vegetarian thali declined 1% on-year in February, while that of a non-vegetarian thali grew by about 6%. “The on-year decline in the cost of a vegetarian thali was because of a fall in prices of tomato and liquid petroleum gas (LPG) cylinder,” it noted.

On-month, the costs of both vegetarian and non-vegetarian thalis declined 5% during the month, it said, adding that onion, potato and tomato prices were down 7%, 17% and 25% on-month, respectively, amid fresh arrivals. Broiler price declined an estimated 5% on-month because of lower demand amid bird flu scare in southern India, it further noted.

A report by Union Bank of India noted that India CPI likely slowed down further to 3.94% in February 2025 as against 4.31% in January 2025 on account of further easing in vegetable prices, especially OPT (onion, potato and tomato). It expects that food inflation has eased to less than 5% in February.

Meanwhile, Bank of Baroda has pegged retail inflation in February at 4.1%. “Decline in vegetable prices (especially tomato and potato) and controlled pulses inflation contributed to the moderation. Milk price cuts further helped lower inflation. Energy prices remained low, preventing major global commodity volatility from impacting inflation,” it said.