Falling food prices cool headline inflation

Consumer Price Index (CPI) inflation softened sharply to 4.3% from 5.2% in December due to easing food inflation.

Food inflation, dipped for the third straight month to a five-month low of 6% from 8.4%. Within food, the easing was led by vegetables inflation, which corrected to 11.3% (from 26.6%), and foodgrains inflation, which eased to 5.5% (from 5.9%).

On the other hand, fruits and edible oils inflation rose. Edible oils have emerged as a pressure point recently, impacted by high global prices and import duties. In January, inflation in this category surged to 15.6%, a 33-month high. Since ~60% of edible oil is imported, a weakening currency also adversely impacts its price.

Non-food inflation (fuel plus core) inched up to a 13-month high of 3.2% but remained in the comfort zone. Core inflation was up 10 basis points (bps) to 3.7%. Fuel inflation was broadly stable compared with December, remaining negative for the 17th straight month, primarily due to retail fuel price relaxations by the government in September 2023 and March 2024