Retail Inflation Rate Falls to Five-Month Low of 4.31 per Cent in January
Significant fall in the prices of vegetables and pulses, industrial output growth slowed to a 3-month low of 3.2 per cent in December 2024 due to poor performance of mining and manufacturing sectors
New Delhi: The common man is likely to get some relief in their household budgets as India's headline retail inflation rate fell to a five-month low of 4.31 per cent in January, mainly due to the significant fall in the prices of vegetables and pulses that eased during the month. Meanwhile, India’s industrial output growth slowed to a 3-month low of 3.2 per cent in December 2024 due to poor performance of mining and manufacturing sectors, the government data showed on Wednesday.
As per the National Statistics Office (NSO) data, the retail inflation, based on the Consumer Price Index (CPI), was 5.22 per cent in December and 5.1 per cent in January 2024, while the previous low inflation was in August 2024 at 3.65 per cent. "A significant decline in headline and food inflation in the rural sector was observed in January 2025, while it was 4.64 per cent in January compared to 5.76 per cent in the preceding month," the NSO data showed.
“Food inflation also stood at 6.02 per cent, showing a major decline from 8.39 per cent in December and 8.3 per cent recorded in the corresponding month last year. There is a decline of 91 basis points in CPI inflation of January 2025 in comparison to December 2024 and it is the lowest year-on-year inflation after August 2024,” the data showed.
The dip in January inflation, however, showed that it maintained the central bank’s mandate to keep retail inflation at 4 per cent, with a permissible fluctuation range of 2 per cent above or below this target. Recently, the Reserve Bank of India (RBI), lowered the repo rate by 25 basis points to 6.25 per cent. In October, India's retail inflation climbed to a 14-month peak of 6.2 per cent, while food inflation soared to a 15-month high of 10.9 per cent.
“The food inflation in the rural sector was 6.31 per cent in comparison to 8.65 per cent in December 2024. Similarly, urban inflation witnessed a sharp decline from 4.58 per cent in December 2024 to 3.87 per cent in January. Food inflation decreased from 7.9 per cent in December to 5.53 per cent in January 2025,” the data showed.
Commenting on the data, Aditi Nayar, chief Economist, ICRA said the CPI inflation fell appreciably sharper than expected to a five-month low, led primarily by food items, vindicating the unanimous rate cut effected by the RBI Monetary Policy Committee (MPC) last week. “Looking ahead, ICRA believes that the growth-inflation outlook suggests that there is room for another 25 bps rate cut in either the April or the June 2025 meetings. The exact timing of the same would depend on the incoming data, global developments, and the movements in the USD/INR pair," she added.
Meanwhile, India's industrial production growth slowed to a three-month low of 3.2 per cent in December 2024, mainly due to poor performance of mining and manufacturing sectors. The government has also revised the November 2024 industrial output figure to 5 per cent from the provisional estimate of 5.2 per cent released in the previous month, according to the government data.
As per the data, mining production growth declined to 2.6 per cent from 5.2 per cent year-on-year, while power output increased to 6.2 per cent in December 2024 from 1.2 per cent a year ago. “Consumer durables (or white goods production) grew by 8.3 per cent during the reporting month against a growth of 5.2 per cent in December 2023. In the April-December 2024 period, the IIP grew 4 per cent, slower than 6.3 per cent recorded in the year-ago period,” the data showed.
