India's retail inflation eases marginally to 5.09% in February

India's retail inflation experienced a slight decline, settling at 5.09 percent on an annual basis in February, according to data unveiled by the Ministry of Statistics & Programme Implementation. This marks a marginal decrease from the 5.10 percent recorded in the previous month.

This dip in inflation, compared to the previous year's 6.44 percent, signifies a promising trend towards economic stability.

On a sequential basis, the inflation rate increased to 0.16 percent against a contraction of (-)0.11 percent in the previous month.

The latest data signifies that the target inflation has consistently remained within the Reserve Bank of India (RBI)'s acceptable range of 2-6 percent for six consecutive months. Nevertheless, it's noteworthy that this marks the 53rd consecutive week where the headline figure has surpassed the medium-target rate of 4 percent.

In February, rural inflation remained unchanged at 5.34 percent, maintaining the same level as in January and December, where it stood at 5.93 percent. Similarly, urban inflation experienced a slight decrease to 4.78 percent in February, compared to January's figure of 4.92 percent.

The category of food and beverages saw an inflation rate of 8.66 percent in February 2024, slightly higher than the 8.3 percent recorded in January of the same year.

The vegetable inflation surged to 30.25 per cent from 27.03 per cent in January. In addition, the fuel and light inflation witnessed a contraction of (-)0.77 per cent as against a contraction of (-)0.60 per cent.

During its February meeting, the RBI Monetary Policy Committee (MPC) decided to maintain its inflation forecast for FY24 at 5.4 percent. This decision was made despite growing concerns over rising food prices, uncertainties surrounding crude oil costs despite recent declines, and the potential for domestic growth momentum to generate inflationary pressures.

Furthermore, the central bank stated its expectation that inflation would remain at 5 percent for the current quarter, ending on March 31st.