India's Consumer Price Index (CPI) inflation dropped to 3.61% in February 2025, marking the first time in six months that it fell below the Reserve Bank of India’s (RBI) target of 4%. The decline in CPI inflation was primarily driven by a significant drop in food prices, with food inflation falling to 3.75% in February, down from 5.97% in January.
Meanwhile, India’s Wholesale Price Index (WPI)-based inflation rose to 2.38% in February 2025, slightly up from 2.31% in January. This increase was driven by higher fuel and power prices, as well as increased manufacturing costs. The fuel and power index rose by 2.12%, mainly due to a 4.28% rise in electricity prices and a 1.87% increase in mineral oil prices. The manufacturing sector also saw a 0.42% price increase, with significant hikes in food products, basic metals, and chemicals.
The WPI Food Index, which includes both food articles and manufactured food products, fell to 5.94% in February from 7.47% in January, partially mitigating the overall inflation rise. India’s Index of Industrial Production (IIP) grew by 5% in January 2025, up from 3.2% in December 2024, driven by strong performances in manufacturing and mining sectors.
The RBI’s next Monetary Policy Committee (MPC) meeting is scheduled for April 7-9, 2025. Following the 25 basis point rate cut to 6.25% in February 2025, expectations are building for further rate cuts, as CPI inflation has cooled to a seven-month low.
