India's WPI Inflation Surges To 2.38 Per Cent In Feb, Food Prices Ease

In February 2025, CPI inflation fell to 3.61 per cent, dropping below the Reserve Bank of India's (RBI) target of 4 per cent for the first time in six months.

Food inflation, which was recorded at 5.97 per cent in January, decreased significantly to 3.75 per cent in February.

Source : ABPLIVE AI

India's wholesale price index (WPI)-based inflation climbed to 2.38 per cent in February 2025, official data released by the Ministry of Commerce and Industry revealed on Monday. Comparatively, the WPI inflation stood at 2.31 per cent a month earlier in January. 

The uptick was largely attributed to rising costs in the fuel and power sectors, reported Business Standard. On a month-to-month basis, WPI inflation saw a marginal increase of 0.06 per cent compared to the preceding month.

Retail Inflation Eases Below RBI Target

While wholesale inflation showed an increase, India's retail inflation, reflected in the Consumer Price Index (CPI), saw a notable decline. In February 2025, CPI inflation fell to 3.61 per cent, dropping below the Reserve Bank of India's (RBI) target of 4 per cent for the first time in six months.

The decline was mainly driven by a substantial reduction in food prices. Food inflation, which was recorded at 5.97 per cent in January, decreased significantly to 3.75 per cent in February.

The country's industrial production also showed positive momentum. The Index of Industrial Production (IIP), which tracks industrial output, expanded by 5 per cent in January 2025, improving from 3.2 per cent in December 2024. This growth was largely fueled by strong performances in the manufacturing and mining sectors, reflecting a revival in industrial activity.

WPI vs CPI

Though both WPI and CPI serve as measures of inflation, they differ in focus and methodology. WPI captures price movements at the wholesale level and primarily covers goods exchanged between businesses, excluding services. Meanwhile, CPI provides a snapshot of price changes at the retail level, incorporating expenses borne by consumers across categories of goods and services such as food, housing, healthcare, and education.

Market Anticipates Further Rate Cuts

The RBI is set to convene its next Monetary Policy Committee (MPC) meeting between April 7 and 9, 2025. In the previous meeting held in February, the central bank reduced the benchmark repo rate by 25 basis points, lowering it from 6.5 per cent to 6.25 per cent. This marked the first rate cut in nearly five years and was aimed at fostering economic expansion by easing borrowing costs.

With retail inflation dipping to its lowest level in seven months, market analysts expect the RBI to consider further rate reductions in its upcoming policy review. The easing of inflationary pressures may provide the central bank with room to adopt a more accommodative stance to support growth.