New Delhi: Continuing its downward trend, India’s retail inflation declined to a five-month low of 4.31 per cent in January, primarily due to a decrease in the prices of vegetables, eggs, and pulses, according to data released by the National Statistical Office (NSO).
The Consumer Price Index (CPI)-based inflation stood at 5.22 per cent in December and 5.1 per cent in January 2024. The last time inflation was lower was in August 2024, when it stood at 3.65 per cent. The CPI has been on a steady decline since October.
Food inflation, a key driver of overall inflation, eased to 6.02 per cent in January, the lowest since August 2024, when it was recorded at 5.66 per cent.
“The significant decline in headline inflation and food inflation during January 2025 is mainly attributed to a decrease in the prices of vegetables, eggs, pulses, cereals, education, clothing, and healthcare,” the NSO stated in its report.
A notable 91 basis points drop in headline inflation was observed in January 2025 compared to the previous month, making it the lowest year-on-year inflation since August 2024.
Among the items experiencing the highest year-on-year inflation were coconut oil (54.2 per cent), potato (49.61 per cent), coconut (38.71 per cent), garlic (30.65 per cent), and peas (30.17 per cent). Conversely, jeera (-32.25 per cent), ginger (-30.92 per cent), dry chilies (-11.27 per cent), brinjal (-9.94 per cent), and LPG (-9.29 per cent) saw the steepest declines in price.
Rural inflation also saw a sharp drop, coming in at 4.64 per cent in January compared to 5.76 per cent in December. Food inflation in rural areas decreased significantly to 6.31 per cent from 8.65 per cent in the previous month.
Similarly, urban inflation declined from 4.58 per cent in December to 3.87 per cent in January, with food inflation dropping from 7.9 per cent to 5.53 per cent during the same period. However, housing inflation remained slightly higher at 2.76 per cent in January over the previous month.
State-wise, Kerala (6.76 per cent), Odisha (6.05 per cent), Chhattisgarh (5.85 per cent), Haryana (5.1 per cent), and Bihar (5.06 per cent) recorded inflation above the national average. Delhi reported the lowest inflation at 2.02 per cent.
Meanwhile, India’s industrial production growth slowed to a three-month low of 3.2 per cent in December 2024, mainly due to subdued performance in the mining and manufacturing sectors, according to NSO data released on Wednesday.
The government also revised November 2024’s industrial output growth to 5 per cent from the previously estimated 5.2 per cent. The factory output growth was at a similar level of 3.2 per cent in September, while it remained flat in August 2024. October 2024 saw a growth of 3.7 per cent.
“The slowdown in industrial production in December reflects a weaker performance in manufacturing and mining. However, a moderate improvement in power generation is a positive sign,” an industry expert noted.
India’s factory output, measured by the Index of Industrial Production (IIP), grew at 4.4 per cent in December 2023. In December 2024, the manufacturing sector’s output increased by 3 per cent, down from 4.6 per cent a year ago. Mining production growth declined to 2.6 per cent from 5.2 per cent year-on-year, while power output saw an increase of 6.2 per cent, up from 1.2 per cent in December 2023.
During the April-December 2024 period, IIP growth was recorded at 4 per cent, lower than the 6.3 per cent recorded in the corresponding period of the previous year.
Capital goods, a key indicator of investment activity, grew 10.3 per cent in December 2024, significantly higher than the 3.7 per cent growth recorded in December 2023. Consumer durables output rose by 8.3 per cent compared to 5.2 per cent in the year-ago period.
However, consumer non-durables output contracted by 7.6 per cent in December 2024, compared to a 3 per cent growth in December 2023. Infrastructure and construction goods expanded by 6.3 per cent, up from 5.5 per cent a year ago.
Primary goods output grew by 3.8 per cent in December 2024, down from 4.8 per cent in the previous year, while intermediate goods production improved to 5.9 per cent from 3.7 per cent a year earlier.
Last week, the Reserve Bank of India (RBI) cut interest rates by 25 basis points, marking its first reduction in five years. With inflation now within the RBI’s target range of 4 per cent (±2 per cent), the move aims to support economic growth while ensuring price stability.
“The RBI’s decision to cut rates reflects its confidence that inflationary pressures are easing. This should provide a boost to consumption and investment in the coming months,” an economist noted.
The NSO compiles CPI data from 1,114 urban markets and 1,181 villages across India, collecting price data weekly.