Retail inflation in India fell to 4.31% in January 2025, its lowest level in five months, bringing relief to consumers. This decline was driven primarily by falling prices of vegetables, eggs, and pulses. According to the National Statistics Office (NSO), inflation had stood at 5.22% in December 2024 and 5.1% in January 2024. The last time inflation was below 4% was in August 2024, when it stood at 3.65%.
Major Price Changes – What Became Costlier and Cheaper?
The NSO report highlights key items with the highest inflation rates in January 2025:
- Coconut oil: +54.2%
- Potato: +49.61%
- Coconut: +38.71%
- Garlic: +30.65%
- Peas: +30.17%
Meanwhile, certain items saw significant price drops:
- Jeera (Cumin): -32.25%
- Ginger: -30.92%
- Dry chilies: -11.27%
- Brinjal: -9.94%
- LPG (excluding conveyance): -9.29%
Rural vs. Urban Inflation Trends
The decline in inflation was observed across both rural and urban areas:
- Rural inflation dropped to 4.64% in January, down from 5.76% in December.
- Urban inflation fell to 3.87% in January, compared to 4.58% in December.
Food inflation also followed a similar trend:
- Rural food inflation: 6.31% in January (8.65% in December).
- Urban food inflation: 5.53% in January (7.9% in December).
However, housing inflation saw a marginal increase to 2.76% in January.
Inflation Trends Across States
Among Indian states, Kerala (6.76%), Odisha (6.05%), and Chhattisgarh (5.85%) recorded inflation rates higher than the national average. Meanwhile, Delhi had the lowest inflation at 2.02%.
Impact on Monetary Policy – More Rate Cuts Ahead?
The Reserve Bank of India (RBI) recently cut interest rates by 25 basis points, the first reduction in five years, to boost economic growth. With inflation remaining within the RBI’s target range (4% ± 2%), economists predict another 25 bps rate cut in the coming months.
