Retail inflation in February dipped to a four-month low of 5.09 percent, remaining within the Reserve Bank's comfort zone of 6 percent for the sixth consecutive month, as per government data released on Tuesday.
The February inflation figure, based on the Consumer Price Index (CPI), remained nearly unchanged compared to January's 5.1 percent, despite certain items in the food basket experiencing price increases.
Inflation in the food basket saw a slight uptick to 8.66 percent in February from 8.3 percent in the previous month, according to data from the National Statistical Office (NSO).
Month-on-month, inflation slightly eased for vegetables, fruits, 'oils and fats', and 'pulses and products' in February. However, the rate of price growth was higher in segments such as 'cereals and products', 'meat and fish', and 'milk and products'.
The food basket holds nearly 50 percent weight in the CPI.
NSO reported that average inflation in rural areas stood higher at 5.34 percent in February compared to 4.78 percent in urban areas.
Among states, Odisha registered the highest inflation at 7.55 percent in February, while Delhi reported the lowest at 2.42 percent.
The Reserve Bank of India (RBI) has been tasked by the government to maintain retail inflation at 4 percent with a margin of 2 percent on either side.
Last month, the central bank projected CPI inflation at 5.4 percent for the current fiscal year (2023-24) and 5 percent for the January-March quarter.
Aditi Nayar, Chief Economist at ICRA, commented on the CPI data, noting that apart from food and beverages, inflation eased across all other sub-groups in February 2024, indicating a favorable moderation in non-food items' momentum.
Nayar highlighted an encouraging trend where the core-CPI, excluding food and beverages, fuel and light, and petrol and diesel for vehicles, eased to 3.5 percent in February 2024 from 3.7 percent in January 2024, marking its lowest reading for this metric since January 2015.
The NSO gathers price data from selected 1,114 urban markets and 1,181 villages covering all states and union territories.
The RBI's Monetary Policy Committee (MPC), which sets the benchmark interest rate, primarily considers retail inflation in its decision-making process.
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