Retail Inflation: There is good news for the public on the inflation front. On Wednesday, the government released the retail inflation data, which brought relief.
Inflation rate fell to 4.31% in January, which is the lowest level in five months. This decline was mainly due to the reduction in food prices. In comparison, the inflation rate was 5.22% in December and 5.1% in the same period last year.
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Retail Inflation Nears RBI’s Target Range Amid Falling Food Costs
The decline in CPI-based retail inflation was largely influenced by the decline in food inflation. According to official data released by the government on Wednesday, food inflation stood at 6.02% in January, while it was 8.39% in December.
This figure was recorded at 8.3% in January last year. It is noteworthy that retail inflation in the country is now approaching the Reserve Bank of India’s (RBI) target of 2-4%.
Better-Than-Expected Inflation Data Released
The latest retail inflation figures have also surpassed experts’ forecasts and the Reserve Bank of India’s (RBI) estimates. Experts had predicted the retail inflation rate to be around 4.5% in January.
However, the actual figures released on Wednesday showed even better results. After the recent MPC meeting, the RBI Governor had estimated the inflation rate to be around 4.4% for this quarter.
Controlled Inflation Sparks New Hopes
Recently, the Reserve Bank of India (RBI) cut the repo rate for the first time in five years, providing a big relief to borrowers. Now, with inflation also falling significantly, expectations of another rate cut have increased.
Since retail inflation has come within the RBI’s target range, the possibility of further repo rate cuts has increased. After the latest cut, the repo rate has come down from 6.50% to 6.25%.
Also Read: RBI Slashes Repo Rate by 0.25% After 5 Years, Loan EMIs to Decrease
