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Below the Retail Inflation Views on Steady Decline in Inflation Strengthens RBI’s Flexibility, But INR Depreciation Remains a Concern by  Dr. Vikas Gupta ,CEO and Chief Investment Strategist, OmniScience Capital

“The consistent decline in CPI and CFPI from their peaks in October 2024, when they stood at 6.21% and 10.87%, respectively, to 4.31% and 6.02% in January 2025, is a strong and encouraging signal for the economy. Not only do these figures mark a substantial improvement from their previous highs, but they are also significantly lower compared to January 2024 levels, reflecting a sustained disinflationary trend.

With inflation steadily converging toward the RBI’s target range of 4% (+/- 2%), this creates room for the central bank to adopt a more accommodative stance, potentially cutting interest rates if necessary to bolster economic growth. Lower inflation supports consumer purchasing power, enhances business confidence, and fosters a stable macroeconomic environment. However, the recent depreciation of the Indian rupee against the US dollar presents a critical challenge, as it could limit the RBI’s ability to ease monetary policy too aggressively. Balancing inflation management with currency stability will be key in determining the RBI’s next policy moves."

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