India's Food Inflation Drops Below 5% In Feb 2025: Report

The report noted that strong kharif crop production and seasonal winter adjustments in vegetable prices were key factors in driving down food inflation

Food inflation in India is likely to have dropped below 5 per cent for the first time since June 2023, according to a report by Union Bank of India. The report also highlighted that India's overall retail inflation is expected to have eased further in February 2025, falling below the 4 per cent mark, mainly due to a decrease in vegetable prices.

It stated, "Food inflation has probably come below the 5 per cent levels for the first time after June'23." The report estimated that the Consumer Price Index (CPI) inflation decreased to 3.94 per cent in February, down from 4.31 per cent in January 2025.

Food inflation, a key driver of retail inflation, is estimated to have further decreased to 4.66 per cent in February 2025, marking a notable drop. This is the first time since June 2023 that food inflation has likely fallen below the 5 per cent threshold.

Month-on-month (m/m) food inflation remained negative for the fourth consecutive month, which aligns with the winter season when vegetable prices typically drop.

Downward Trend

This downward trend is clearly reflected in the vegetables Consumer Price Index (CPI), which sharply declined from 11.35 per cent in January 2025 to 3.89 per cent in February 2025. On-the-ground (OTG) prices for vegetables and pulses also continued to ease during the month, contributing to the overall reduction in food inflation.

The report noted that strong kharif crop production and seasonal winter adjustments in vegetable prices were key factors in driving down food inflation.

However, prices for edible oils and sugar experienced an upward trend during the same period.

Meanwhile, the core CPI, which excludes food and fuel, increased slightly to 3.87 per cent in February 2025 from 3.66 per cent in January 2025, mainly due to a rise in gold prices. In contrast, fuel CPI remained in deflationary territory, helping to mitigate some of the inflationary pressures in other sectors.

These latest figures suggest that India's inflationary trajectory is on a downward path, offering some relief to both consumers and policymakers. However, fluctuations in global commodity prices and domestic food supply conditions will continue to shape future inflation trends.