Retail inflation dipped marginally to 6.44 per cent in February, mainly on account of a slight easing in the prices of food and fuel items, according to government data released on Monday.
The CPI (consumer price index) inflation stayed above the Reserve Bank of India’s (RBI) upper tolerance level of 6 per cent for the second straight month, which may prompt the monetary authority to weigh an increase in borrowing costs to the highest level in seven years.
The retail inflation rate based on CPI stood at 6.52 per cent in January and 6.07 per cent in February 2022.
Inflation for the food basket worked out to 5.95 per cent in February, marginally lower than 6 per cent in January. It was 5.85 per cent in February last year.
According to the data, vegetable prices dipped 11.61 per cent on an annual basis, though it recorded a double-digit increase in spices (20.20 per cent) and cereals and products (16.73 per cent).
A decline in inflation was also witnessed in the oils and fats segment.
The price rise remained subdued in segments such as meat and fish, eggs, pulses and products, sugar and confectionery and non-alcoholic beverages.
On the other hand, inflation in the fuel and light segment worked out to 9.90 per cent. Milk and products, clothing and footwear also became dearer during the month.
The data also revealed that inflation in rural areas was higher at 6.72 per cent during the month compared with 6.10 per cent in urban centres.
Aditi Nayar, chief economist, Icra said: “While the correction in the prices of heavily weighted items in the CPI basket such as wheat, vegetables and edible oils augurs well for the food inflation print in the current month amidst a high base (CPI food inflation was at +7.7% in March 2022), there are concerns around the impact of a likely heatwave on the wheat crop and the consequent impact on wheat prices in the near term.”
“This along with the possibility of the occurrence of El Nino around the summer season and its impact on monsoons would play an important role in determining the trajectory of food inflation over the next few quarters.”