Retail inflation declines to five-month low in January

Retail inflation eased to a five-month low at 4.31 per cent in January primarily due to declining food costsas per the official data released on Wednesday. The Consumer Price Index-based retail inflation stood at 5.22 per cent in December and 5.1 per cent in January 2024
Additionally, food inflation 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.
The National Statistics Office (NSO) data revealed a 91 basis points reduction in January 2025 headline inflation compared to December 2024, representing the lowest year-on-year inflation since August 2024.
The five items with highest year-on-year inflation are coconut oil (54.2 per cent), potato (49.61 per cent), coconut (38.71 per cent), garlic (30.65 per cent), peas (30.17 per cent).
Meanwhile, items recording lowest year-on-year inflation in January included jeera (-32.25 per cent), ginger (-30.92 per cent), dry chilies (-11.27 per cent), brinjal (-9.94 per cent), LPG (excluding conveyance) (-9.29 per cent).
Last week, the Reserve Bank implemented a 25 basis points rate reduction last week, their first in five years, to boost growth amidst favourable inflation levels. The government has tasked the central bank with maintaining CPI at 4 per cent, allowing a 2 per cent margin either way.
NSO reported that January 2025 witnessed a decrease in both headline and food inflation within the rural sector. The inflation rate dropped to 4.64 per cent in January from 5.76 per cent recorded in the previous month.
In rural areas, food inflation declined to 6.31 per cent from 8.65 per cent in December 2024.
The inflation in the urban sector fell to 3.87 per cent in January from 4.58 per cent in December 2024. Food inflation in urban areas decreased to 5.53 per cent in January 2025 from 7.9 per cent in December.
The housing inflation showed a slight increase to 2.76 per cent in January compared to December.
“The significant decline in headline inflation and food inflation during the month of January, 2025 is mainly attributed to decline in inflation of vegetables, eggs, pulses and products, cereals and products, education, clothing and health,” NSO said.
Top five states which had higher inflation than the national average in January were Kerala (6.76 per cent), Odisha (6.05 per cent), Chhattisgarh (5.85 per cent), Haryana (5.1 per cent), and Bihar (5.06 per cent), according to the data. Delhi registered the lowest inflation rate at 2.02 per cent.
Price data collection by NSO includes 1,114 urban markets and 1,181 villages across all States/UTs, conducted on a weekly basis.