There is good news on the inflation front. Due to cheaper food items, retail inflation based on the Consumer Price Index (CPI) has fallen to a 5-month low of 4.31% in January. It was 5.22% in December, while 5 months ago in August, it was at 3.65%.

The Ministry of Statistics and Program Implementation, in the data released by the National Statistical Office (NSO) on Wednesday, stated that the fall in retail inflation was due to the reduction in food prices. According to the data, retail inflation dropped to 4.31% in January. It was 5.22% in December and 5.1% in January last year.

According to NSO data, food inflation fell to 6.02% in January, compared to 8.39% in December and 8.3% during the same period last year. Meanwhile, rural inflation dropped from 5.76% to 4.64%, and urban inflation decreased from 4.58% to 3.87%. Food items contribute around 50% of the inflation basket.

It is noteworthy that the Reserve Bank of India (RBI) has predicted the retail inflation rate to be 4.8% in FY 2024-25 and 4.2% in FY 2025-26. The RBI has been tasked with ensuring that retail inflation stays at 4%, with a tolerance band of +/- 2%.