India's consumer price inflation seen at a 25-month low of 8.1% in February

12 March 2014

Consumer price inflation based on the provisional all-India consumer price index for February 2014 stood at 8.10 per cent, the lowest in 25 months, helped by a moderation in food prices, official data released today showed. Consumer price inflation rate stood at an 8.79 per cent during the previous month.

This is the lowest that the consumer price inflation measured by the consumer price index (CPI) has fallen since the January 2012 level of 7.65 per cent.

 The corresponding provisional inflation rates for rural and urban areas for February 2014 stood at 8.51 per cent and 7.55 per cent, respectively. The final inflation rates for rural and urban areas for January 2014 stood at 9.35 per cent and 8.09 per cent, respectively.

The near 70 basis point decline in consumer price inflation along with a marginal pick up in industrial production provides some hopes of stabilisation in the macro space. However, the current data may not have any major impact on the Reserve Bank's policy decision on interest rate due next month.

While the core inflation rate has come off to 8 per cent, with its components like housing inflation showing signs of slowing down, food inflation can turn more volatile, and therefore, the headline inflation can go up any time.

Overall inflation in the food basket, including beverages, slowed to 8.57 per cent in February from 9.9 per cent in the previous month, according to CPI data released by the government today.

The rate at which vegetable prices increased eased to 14.04 per cent as against 21.91 per cent in January.

Consumer inflation also slowed in protein-rich items such as eggs, fish and meat to 9.69 per cent in February versus 11.69 per cent in January.

The rate of price rise slowed to 9.93 per cent for cereals and related products from 11.42 per cent in January.

However, the pace of price increases for milk and its products picked up in February to 10.37 per cent from 9.82 per cent in the previous month.

The prices of fruits, condiments and spices also rose faster last month.

The RBI, which has maintained a hawkish stand on interest rates to tame inflation, is scheduled to announce the next monetary policy on 1 April.

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