“Retail and Wholesale Inflation India’s CPI reaches 3.6% as wholesale prices increase, but vegetable inflation falls to 5.8%. RBI’s Rate Cut Expectations Rise—Key Takeaways.

Retail inflation decreased to 3.6 percent, the lowest level in 21 months, while food inflation fell to its lowest point in seven months. After climbing 8.35% in January, vegetable inflation fell to 5.80% year on year.

The headline figure’s compliance with the Reserve Bank of India’s (RBI) 4% objective is now heavily reliant on food prices. Price rises in a range of categories, including food goods, articles, textiles, non-food items, and other manufactured commodities, are associated with the surge.

India’s wholesale inflation spiked roughly 0.07% from January’s 2.31% rate, hitting 2.38% in February, largely because essential fruits and vegetables cost more. On Tuesday, March 18, 2025, wholesale inflation in India jumped sharply from 2.31% in January, rising rapidly year-over-year and now at 2.38% in February.

The recent excellent weather in India has raised vegetable production and enhanced supply, easing pricing pressures and generating chances of a big interest rate fall in the coming months.

Official data reveals the wholesale inflation rate surged from 2.31% in January rapidly upwards to 2.38% by February’s end somehow. Food inflation dropped significantly from 5.9% in January to 3.75% in February as decreasing food costs took effect rapidly.

According to official figures issued on Monday, wholesale price inflation increased modestly to 2.38 percent in February because of the high cost of processed food goods such as vegetable oil and drinks.

The Wholesale Price Index (WPI) measured inflation in January at 2.31 percent. The percentage for February 2024 was 0.2%.

After three consecutive months of decline, the WPI increased slightly. The monthly change in the WPI was 0.06 percent between January and February retail.

While food accounts for about half of retail inflation, manufactured items make up more than two-thirds of the index.

Retail inflation dropped for months as consumer prices fell to a seven-month low of 3.6 percent and food prices hit their lowest level in 21 months.

It was the fastest increase in core inflation in seven months.

Wholesale inflation is expected to persist at current levels over the next several months. Manufacturers faced additional input cost limitations, and as demand increased, prices were passed on to consumers, according to the purchasing managers’ index, which was released on March 3.

Crude oil prices below $80 per barrel are expected to give more inflationary stimulus.

The chance of the Reserve Bank of India’s Monetary Policy Committee (MPC) delivering a second rate cut at its April meeting has grown owing to the reduction in consumer inflation.

As the RBI expected that inflation would fall below its objective of 4%, the MPC cut the repo rate by 25 basis points in February, the first reduction in five years.

Wholesale inflation, a reliable indication of producer pricing, topped analysts’ 2.36% forecast in a MWN poll.

Kitchen staples: In February, the inflation rate for onions rose to 48.05% from 28.33% in January, while the inflation rate for potatoes fell to 27.54% from 74.28% the previous month. After climbing 8.35% in January, vegetable inflation fell to 5.80% year-on-year retail.

RBI’s opinion on inflation

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) said at its February meeting that a favorable outlook for food prices has contributed to the decline in inflation. To reassure the Indian people, the central bank anticipates inflation to continue to fall in the fiscal year 2025-2026.

Sanjay Malhotra will manage the Reserve Bank of India, which oversees monetary policy and keeps inflation remarkably low within a target range of 2-6%. Figures for FY26 show a growth rate of 4.5% initially, then 4.0% next, followed by 3.8% later and 4.2% finally.

Food expenses grow.

Wholesale food costs rose by 7.47% in January and 5.94% in February. Compared to the previous month’s 8.35% increase, vegetable prices dropped 5.80%. However, prices for fruits, potatoes, and onions rose from 21% to 48% Cereal prices rose 6.77% in February after a 7.33% rise in January retail.

Economic analysis and the risks of inflation

According to the Economic Survey for 2024–25, issued earlier in January, food inflation is predicted to fall in the fourth quarter of FY25. Global uncertainties, however, continue to pose a danger to India’s economic stability. The research state’s manufactured commodity prices, which account for more than 64% of the wholesale price index, rose by 2.86% after a 2.51% gain in January.

Inflationary pressures in the South Asian country have lately eased as a result of great weather that has promoted vegetable output and improved supply, boosting the feasibility of another interest rate decrease in the coming months.

Fruit and onion prices continued to dominate the market, jumping by 20% and 48.05%, respectively. February had a 0.71 percent deflation in the gasoline and electricity sector, down from 2.78 percent the previous month.

Retail inflation data published on Wednesday showed that decreased food prices in February drove Consumer Price Index (CPI)-based inflation to a seven-month low of 3.61 percent.

India’s Retail Inflation Drops to A 21-month Low

• The CPI inflation rate plummeted sharply in February 2025, reaching 3.6%, its lowest level since May 2023.
• Driven by sharply falling veggie prices, food inflation plummeted rapidly downward, reaching a remarkably low 3.75% mark.
• While potato prices dropped 27.5%, onions experienced a shocking 48% increase.
• Due to the rising costs of fruits, processed goods, and textiles, wholesale inflation increased by 2.38%.
• Increasing hopes for a decrease in RBI interest rates came as the weather improved supply and reduced costs.
• After CPI dropped below the Indian Reserve Bank’s target of 4%, expectations of a rate decrease surged.
• With crude oil plummeting below $80 per barrel, global threats overshadow India’s stability.
• The Reserve Bank of India depicts for FY26 an inflation quarterly rate of 4.5% in the first quarter, 4.0% in the second, 3.8% in the third, and 4.2% in the final quarter.
• ICRA has forecasted an increase in core WPI inflation as the sectoral deflation rate falls to 0.71% in February.

ICRA Senior Economic Rahul Agrawal says that deflation in fuel and power is decreasing. Also, core WPI inflation (non-food manufacturing) has risen to 1.3%, a 24-month high. These factors are balancing out the decrease in food inflation. This is putting pressure on the overall number.

According to figures published last week, a decline in vegetable prices may have helped India’s retail inflation fall below the central bank’s 4% goal in February.

Wholesale food costs rose by 7.47% in January and 5.94% in February. Compared to the previous month’s 8.35% increase, vegetable prices dropped 5.80%. However, prices for fruits, potatoes, and onions rose from 21% to 48% retail wholesale.