Informist Poll
Feb CPI inflation seen dropping below 4% after 5-month gap
This story was originally published at 12:22 IST on 7 March 2025
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By Shubham Rana
NEW DELHI – India's headline CPI inflation likely fell to a six-month low of 3.9% in February, according to an Informist poll of 16 economists. Headline retail inflation had briefly dropped to 3.6-3.7% in Jul-Aug last year after spending nearly five years above the Reserve Bank of India's medium-term target of 4.00%.
CPI inflation stood at 4.31% in January and 5.09% in February 2024. The statistics ministry will release the retail inflation data for February at 1600 IST on Wednesday.
According to economists, inflation likely eased in February for the fourth month in a row primarily due to a further decline in food prices, particularly those of vegetables, with Teresa John, deputy head of research and economist at Nirmal Bang Institutional Equities, estimating that 'food and beverage' inflation may have fallen to 5.3% from 5.68% in January. However, the pace of sequential decline in vegetable prices is likely to have seen a sharp moderation, John added.
"While prices of tomatoes, onions and potatoes have continued to decline on a MoM (month-on-month) basis, prices of other vegetables have inched up likely on account of early onset of summer," John said. According to data from the Department of Consumer Affairs, prices of tomato, onion, and potato were down 25.1%, 7.4%, and 16.6%, respectively, in February from the previous month.
Apart from vegetables, prices of pulses, rice, and milk also declined sequentially last month, helping bring down the headline inflation rate. However, wheat and edible oil prices continued to rise.
"...in coming months, the risks of food prices rebounding seasonally appears high, as India's meteorological department is guiding for a very hot summer," Rahul Bajoria, head of India economic research at BofA Securities, said in a note earlier this week.
While food inflation is expected to have continued its downward journey in February, core inflation is seen steady at around 3.7-3.8%. Core inflation--which does not include food and fuel items, whose prices can be volatile--was 3.7% in January and has remained below 4% for 14 consecutive months.
"Core CPI (inflation) is expected to remain rangebound at 3.83%, given marginally higher gold prices, and some pick up in core services as well," Bajoria noted. "We believe core CPI (inflation) will likely go above 4% in next three months, but weak consumption will keep a leash on underlying price pressures."
A drop in CPI inflation in February to 3.9% would take the average for Jan-Feb to 4.1%, well below the RBI's quarterly forecast 4.4%, and provide the central bank's Monetary Policy Committee further room to lower interest rates at its upcoming Apr. 7-9 meeting by another 25 basis points to 6.00%.
"We believe this disinflation has legs and is significant, for it will mean a reset of inflation projections and the RBI could achieve its inflation target on a durable basis sooner than previously expected. If extreme weather remains at bay, it is even possible that CPI inflation will remain around or below 4% for the whole of 2025," said Dhiraj Nim, an economist at ANZ Banking Group.
"The evolving macro configuration is expected to embolden the RBI to stimulate the economy more strongly. We expect a 25 bps rate cut each in April and June, with risks of more if growth so warrants and weather remains conducive," Nim added.
The following is a summary of the poll on CPI inflation in February:
| ORGANISATION | CPI INFLATION ESTIMATE |
| Motilal Oswal Financial Services | 3.6% |
| ICICI Securities Primary Dealership | 3.7% |
| India Ratings and Research | 3.7% |
| ANZ Banking Group | 3.8% |
| HDFC Bank | 3.8% |
| Kotak Mahindra Bank | 3.8% |
| Sunidhi Securities | 3.82% |
| IDFC FIRST Bank | 3.9% |
| Standard Chartered | 3.9% |
| Acuite Ratings and Research | 4.0% |
| BofA Securities | 4.0% |
| Bank of Baroda | 4.1% |
| ICRA | 4.1% |
| STCI Primary Dealer | 4.15% |
| Nirmal Bang Institutional Equities | 4.2% |
| YES Bank | 4.35% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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