India's Retail Inflation Drops To Seven-Month Low In February

New Delhi: India's retail inflation declined to a seven-month low in February, primarily due to a slower increase in food prices, according to provisional data released by the government on Wednesday. The easing inflation has fueled expectations of a possible interest rate cut by the Reserve Bank of India (RBI), Mint reported.

Data from the Ministry of Statistics & Programme Implementation (MoSPI) shows retail inflation, measured by the Consumer Price Index (CPI), stood at 3.61 per cent in February, compared to 4.26 in January. The inflation rate was notably higher in previous months, recorded at 5.22 per cent in December and 5.48 per cent in November, while it stood at 5.09 per cent in February last year.

A significant contributor to the decline was food inflation, which moderated to 3.75 per cent in February, down from 5.97 per cent in January. Notably, this figure was revised from the initially reported 6.02 per cent increase, per the latest MoSPI update.

Meanwhile, India's industrial production witnessed a notable rebound in January, following a slowdown in the preceding month, largely attributed to a rise in manufacturing and mining activities. The Index of Industrial Production (IIP) increased by 5 per cent in January, up from 3.2 per cent in December, according to MoSPI’s latest estimates.

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The better-than-expected industrial performance in January suggests a strengthening economy. A survey conducted by Mint involving 25 economists, had predicted retail inflation to drop to 3.9 per cent in February, driven by declining food prices. The continuous decline in inflation for four consecutive months has reinforced expectations of an RBI rate cut in April.

With India's GDP growing at 6.4 per cent in the December quarter—its slowest pace since Q4FY23, excluding one quarter—economists widely anticipate that the central bank may consider reducing interest rates next month to support economic growth.