Food Inflation Eases but Prices Still a Concern
- Food inflation fell to a 21-month low of 3.8%, but the cost of over half the food items in the CPI basket still increased in February, affecting consumers.
- Food contributes 44% to retail inflation, significantly influencing India’s Consumer Price Index (CPI).
- 55% of food items in the basket saw a price rise, impacting overall inflation, which dropped to 3.6% in February—a seven-month low.
Key Factors Behind the Inflation Drop
- Vegetables and pulses led the decline:
- Vegetable inflation had remained in double digits for 14 of the last 15 months but turned negative in February.
- Pulses inflation also fell into negative territory for the first time in three years.
Food Prices Still Rising
- Fruits became more expensive, with fruit inflation hitting a 10-year high of 14.8% in February.
- Banana (+3%), coconut (+2.8%), papaya (+3%), and guava (+8%) prices saw notable increases.
- Rice prices were up 0.4%, while oil inflation surged to 16.4%, a three-year high.
- Refined oil was 0.5% costlier, and coconut oil prices jumped 3.7%.
Outlook & Expert Opinion
- Economists believe food inflation has likely bottomed out, with vegetable prices expected to rise in March 2025.
- This could push CPI inflation up to 3.9-4.0% next month, according to Aditi Nayar, Chief Economist at ICRA.
Rising Prices Beyond Food
- Services inflation hit a 17-month high of 3.71% in February.
- Other goods inflation rose to 4.44%, up from 3.9% the previous month.
Conclusion
While overall food inflation has cooled, rising prices of essential items like fruits, oils, and services continue to put financial pressure on households.
