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The year-on-year inflation rate, based on the Consumer Price Index (CPI), eased to an 7-month low of 3.61 per cent in February this year, which is 0.65 per cent lower than the corresponding figure for January, as food prices came down further during the month. This is the lowest retail inflation after July 2024. 

The food inflation in February has come down to the lowest level since May 2023 and is 222 basis points lower in comparison to January, according to the official statement.

The significant decline in headline inflation and food inflation during February is mainly attributed to a decline in the inflation rate of vegetables, eggs, meat & fish, pulses, as well as milk & products.

The key items having the lowest year-on-year inflation in February are ginger (-35.81 per cent), jeera (-28.77 per cent), tomato (-28.51 per cent), cauliflower (-21.19 per cent), garlic (-20.32 per cent), official figures show.

Prices of fuel came down during the month, easing the burden on household budgets with inflation being recorded at (-) 1.33 per cent during February.

As retail inflation continues with its downward trend and has fallen below the RBI’s targeted level of 4 per cent, the central bank will have more headroom to go for a rate cut to propel economic growth and create more jobs.

RBI Governor Sanjay Malhotra last month announced a 25 basis cut in the policy rate from 6.5 per cent to 6.25 per cent in the monetary policy review to accelerate growth amid global uncertainties.

He said that inflation has declined and is expected to further moderate and gradually align with the RBI’s target of 4 per cent.

The monetary policy decision maintains a delicate balance between controlling inflation and pushing up the growth rate in a slowing economy,

The MPC also unanimously decided to continue with its neutral stance in monetary policy and will focus on inflation while supporting growth. This would provide flexibility to respond to the macroeconomic environment, Malhotra said.