India's Inflation Eases, Lowest Since July 2024

India's inflation outlook improved significantly in February 2025, with the CPI inflation rate dropping to 3.61%. This marks the lowest level since July 2024, providing relief amidst economic challenges. Food prices notably eased, contributing to the overall decline in both rural and urban sectors.

India's inflation forecasts have shown marked improvement in February 2025, with the year-on-year Consumer Price Index (CPI) inflation rate reducing to 3.61%, a 65-basis-point drop from January. This is the lowest since July 2024, offering respite for consumers amid an ongoing challenging economic backdrop.

New data from the Ministry of Statistics and Programme Implementation reveals a notable decrease in price pressures, especially within the food sector. The All India Consumer Food Price Index (CFPI) recorded inflation at 3.75% year-on-year, a significant reduction of 222 basis points from January 2025, and the lowest food inflation rate since May 2023.

The CPI data indicates varying impacts across rural and urban areas. Rural regions experienced a decline in both headline and food inflation rates, with the rural CPI inflation dropping from 4.59% in January to 3.79% in February, while rural food inflation fell from 6.31% to 4.06% over the same period.

Similarly, urban inflation rates exhibited a noteworthy decline, with urban headline inflation decreasing from 3.87% in January to 3.32% in February. Urban food inflation saw a larger decline from 5.53% to 3.20%, helping to ease the overall inflation rate. Meanwhile, sector-specific trends in February showcased mixed outcomes. Housing inflation saw a slight increase to 2.91% from January's 2.82%.

Fuel and light inflation remained negative at -1.33%, though slightly improved from -1.49% the previous month. Education inflation stayed steady at 3.83%, while health inflation marginally increased to 4.12% from 3.97%. Transport and communication inflation experienced a modest rise to 2.87% from 2.76%.

The substantial drop in inflation, particularly within the food sector, has been largely driven by falling prices in critical commodities such as vegetables, eggs, meat, fish, pulses, and dairy products. These price corrections have significantly alleviated the financial burden on households that have been battling high living costs in recent months.

(With inputs from agencies.)