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The prices of the softest vegetables, especially those of the basic products of the kitchen, helped relieve retail inflation at a minimum of five months of 4.31% in January 2025 and prices are expected to fall more in the coming months. While January numbers support the decision of the monetary policy committee to reduce rates, analysts warn that advancing in depreciated rus can also have an impact on monetary policy.
According to official data published on Wednesday, inflation based on the consumer price index decreased to 4.31% in January from 5.22% in December. It was 5.1% in January 2024. The inflation of the price of food to the consumer also cooled to 6.02% in January this year from 8.39% in December 2024.
Inflation in the food and drink basket also decreased to 5.68% in January from 7.69% in the previous month. The inflation of vegetables remained high but decreased to 11.35% in January from 26.56% in December.
With the prices that are considered moderating in February, retail inflation is considered to be expected to relieve more. ICRA has set the IPC inflation in February 4%. India’s qualifications and investigations also forecast the inflation of the CPI in February and March 2025 to be in the range of 3.9% -4%.
“According to the early data of February 2025 (until February 10, 2025), the average retail prices of 14 of the 22 essential products (except wheat, sugar and most edible oils) softened sequentially in The month. It is likely that the considerable moderation in vegetable prices will go well for the impression of annual food and drink inflation for the month, which is expected to relieve a minimum of six months of approximately 5.2% in February 2025 ” Said Aditi Nayar, chief economist and head of research and scope, Icra.
Summan Chowdhury, executive director and chief economist, Acuité Ratings & Research said that the strong correction in tomato, onion and potato prices, CPIF key components, has contributed to this downward trajectory in food inflation. “In addition, a decrease in the inflation of the pulses, backed by imports without tariffs and strong harvest expectations, has also helped to alleviate the pressures of food prices,” he said. Looking towards the future, the planting of Rabi has been according to the expectations and prices of vegetables have continued to fall more in February 2025, which should help maintain the inflation of the headlines under control during the next two months, he said.
However, analysts have warned that edible prices of oil, with retail inflation in the product that increases to 15.64% in January, could raise a challenge in the coming months along with greater imported inflation due to the fall of rupee .
Central inflation saw a 3.7% marginal increase in January from 3.6% in the previous month.
The RBI has set retail inflation in the fourth quarter of the fiscal year to 4.4% and hopes that 4.5% will be facilitated in the first quarter of fiscal year 2016. The next MPC meeting of the RBI will take place in April.
Paras Jasrai, a senior analyst of India Ratings said that the reduction of future policy would depend on the data. “The action of monetary policy in April 2025 Monetary policy depends on the movement of currency and liquidity in the system,” he said.
Upasna Bhardwaj, chief economist, Kotak Mahindra Bank expects the inflation trajectory to remain benign in the coming months to provide space for another 25 basic points of rates reduced by the MPC. “However, the Rhythm of INR depreciation must be closely monitored by the spills of domestic inflation,” he said.
