By Dr. Priya Kapoor, Senior Economist & Journalist (LinkedIn: bit.ly/DrPriyaKapoor)
Last updated: June 19, 2025
Key Highlights
- Retail inflation eased to 3.60% in February 2025, down from 4.80% in January, according to the Ministry of Statistics & Programme Implementation’s provisional CPI data mospi.gov.in.
- Food prices—especially for vegetables and pulses—saw broad-based moderation over the month.
- Core inflation (excluding food and fuel) remained “sticky” at around 5%, driven by housing and services.
Why Inflation Is Cooling
- Vegetable Prices dropped sharply due to bumper winter harvests and improved supply chains, easing overall food inflation to 1.78% in February mospi.gov.in.
- Fuel Inflation stabilized after global crude prices plateaued, thanks in part to steady imports and modest domestic demand.
- Government Interventions—including buffer stock releases and targeted subsidies—helped tamp down prices of cereals and pulses.
Expert Analysis
“The February CPI print at 3.60% underlines a broad-based disinflation trend, setting the stage for another rate cut by the RBI,” says Sakshi Gupta, Principal Economist at HDFC Bank, Gurugram.
“Food price moderation remains the principal driver, though core pressures suggest cautious optimism.” reuters.com
What RBI Could Do Next
In a recent interview with Business Standard, RBI Governor Sanjay Malhotra noted that inflation running below projections “could open up policy space” reuters.com. Key takeaways:
- Neutral Stance Maintained: Despite a 50 bp rate cut in June, the RBI shifted from “accommodative” to “neutral,” signalling a pause.
- Liquidity Management: Continued use of VRRR auctions and Cash Reserve Ratio adjustments to keep systemic liquidity in check.
- Future Rate Cuts: Markets are pricing in a possible additional 25 bp cut later this year, contingent on monsoon performance and core inflation trajectory.
What This Means for You
- Borrowers
- Home loans & auto loans may see modest rate relief if the RBI trims rates further.
- Savers
- Fixed deposits & small savings schemes could face unchanged or marginally lower yields.
- Consumers
- Grocery bills should remain stable in the near term, but watch out for seasonal spikes in perishables.
Fact‑Check
- Claim: “Inflation has fallen below 3% for the first time in six years.”
- Reality: That milestone refers to May 2025 when CPI hit 2.82% (six‑year low) reuters.comtimesofindia.indiatimes.com. February’s 3.60% is the lowest since July 2024, not an absolute six‑year trough.
- Claim: “RBI will cut rates by 100 bp this year.”
- Reality: So far, the RBI has cut a cumulative 50 bp in June and signalled careful data‑dependence before any further action.
