Retail sales in February 2025 slows down at 7-month low level of 3.61%

India recorded a decline in retail inflation by 3.61% in February compared to 4.31% in January annually, according to government data released on Wednesday.

Reducing consumer pricing index (CPI) in February is mainly attributed to lower food prices. Food inflation, which makes up nearly half of the CPI bucket, fell to 3.75% from 5.97% in January. This marks the lowest inflation rate of food since May 2023, according to official data.

In February 2025, vegetable inflation fell to 1.07% year by year, significantly lower than 11.35% in January. Cereal prices increased by 6.10%, which is slightly reduced by 6.24% growth in January, while pulses declined by 0.35%, contrary to an increase of 2.59% the previous month.
Rural inflation decreased to 3.79% from 4.59% in January, and urban inflation decreased to 3.32% from 3.87% in the previous month.

“There is a drop of 65 basic points in the main inflation of February 2025 compared to January 2025. It is the lowest inflation year after year after July 2024, “the government said.

The main inflation in the urban sector was observed, with a drop of 3.87% in January 2025 to 3.32% (temporary) in February 2025. This trend has affected food inflation, which decreased by 5.53% in January 2025 to 3.20% in February 2025.

In terms of housing inflation, the year for the year for February 2025 was 2.91%, slightly higher than the appropriate rate of 2.82% in January 2025. It is important to note that the housing index is made up exclusively for the urban sector.

The prospect of inflation of the RBI

The Reserve Bank’s Monetary Bank’s Monetary Bank Committee said in February that inflation declined as a result of the positive appearance of food prices and is expected to continue to decline in FY26, ensuring facilitation of Indian households. The purpose of the RBI is to maintain inflation in the target range of 2-6%.

The central bank predicted inflation to be 4.2% for the fiscal year 2025-26. The RBI (MOC) Monetary Policy Committee predicts inflation at 4.5% in the first quarter, 4% in the second quarter, 3.8% in the third quarter and 4.2% in the fourth quarter of FY26, with risks evenly distributed.

The newly appointed Governor of the RBI, Sanjaj Malchotra, noted that inflation decreased from its top by 6.2% in October 2024 to a lower level in November-December. This decline can be attributed to the fall in vegetable prices. The projected inflation of CPI for 2024-25 is 4.8%, with expectations for further moderation in 2025-26, assuming a normal monsoon season.