Though inflation had been on a downward trajectory from its peak of 6.2 per cent in October 2024, the price rise was not expected to ease so sharply in February
Retail inflation declined to 3.75 per cent in February 2025 for the first time in the last six months, owing to a greater-than-expected fall in vegetable prices. Consumer price index-based inflation was 8.66 per cent in February 2024. In January 2025, it stood at 4.31 per cent.
Though inflation had been on a downward trajectory from its peak of 6.2 per cent in October 2024, the price rise was not expected to ease so sharply in February.
Similarly, the manufacturing sector, as recorded under the Index of Industrial Production (IIP), reported encouraging growth figures. In January 2025, industrial growth was five per cent, which was 1.8 percentage points higher than the December 2024 figure. Growth was mainly led by basic metals, coke and refined petroleum products, and electrical equipment.
In terms of use-based industry classification, capital goods led the pack with 7.8 per cent growth, followed by consumer durable goods (7.2 per cent), infrastructure (seven per cent), primary goods (5.5 per cent), and intermediate goods (5.2 per cent).
Consumer non-durable goods, or Fast-Moving Consumer Goods (FMCG), reported a 0.2 per cent contraction, hinting at lower day-to-day spending by people — a deflationary factor that neither the government nor the RBI can afford to ignore.
With retail inflation sliding below its comfort zone of four per cent and the industry broadly performing well, the Reserve Bank of India may slash its repo rate by 25 basis points in its monetary policy meeting as it continues to ease the liquidity deficit in the system.
A repo rate cut is also essential to boost consumption demand in the economy, which is showing signs of stress. However, the only caveat is external factors, which have become unpredictable due to US President Donald Trump’s policies.
