India's Retail Inflation Drops To 4.31% In January

A Reuters poll had earlier projected January inflation at 4.6 per cent, indicating a continued decline that brings inflation closer to the middle of the RBI's tolerance band of 2-6 per cent

Inflation in the food basket was recorded at 6.02 per cent

Source : ABPLIVE AI

Retail inflation eased to 4.31 per cent in January, primarily driven by lower food prices, according to official data released on Wednesday. This represents a 91 basis point decline in headline inflation compared to the previous month, marking the lowest year-on-year (YoY) inflation since August 2024.

A Reuters poll had earlier projected January inflation at 4.6 per cent, indicating a continued decline that brings inflation closer to the middle of the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent. This reduction in inflation is also likely to be welcomed by the RBI, which recently lowered the repo rate by 25 basis points to 6.25 per cent to stimulate economic growth.

Food Inflation

Food inflation, as measured by the Consumer Food Price Index (CFPI), recorded 6.02 per cent in January 2025, marking its lowest level since August 2024. In comparison, food inflation was at 8.39 per cent in December 2024.

Industrial Output Growth

India’s industrial output growth slowed to 3.2 per cent YoY in December 2024, down from 5.2 per cent in November. Among the three key sectors, mining grew by 2.6 per cent, manufacturing expanded by 3.0 per cent, and electricity generation saw a rise of 6.2 per cent.

Despite the overall slowdown, certain industries showed positive growth in December. The manufacture of basic metals grew by 6.7 per cent, while electrical equipment manufacturing surged by 40.1 per cent. Additionally, the production of coke and refined petroleum products rose by 3.9 per cent, helping to support overall industrial activity.

December CPI Trends

India's Consumer Price Index (CPI) inflation for December 2024 stood at 5.22 per cent, a slight decrease from 5.48 per cent in November. This reduction was mainly due to lower prices of key food items, including vegetables, pulses, sugar, and cereals.

Rural Vs Urban Inflation

In January 2025, rural inflation fell to 4.64 per cent, while urban inflation decreased to 3.87 per cent. This represented a further decline from December 2024, when rural inflation was 5.76 per cent and urban inflation was 4.58 per cent.