Inflation in February 2024 Stayed Within RBI’s Tolerance Range

On March 12, 2024, the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) released India’s inflation data for February 2024, which brought some relief to the nation. The Consumer Price Index (CPI) inflation fell to 5.09%. This marks a decline from 5.10% in January and is under the tolerance range of 2% to 6% for a sixth consecutive month. However, a closer look reveals a mixed bag, with core inflation dipping further but food prices remaining a concern.

Notes: Prov. – Provisional, Combd. – Combined

Core Inflation at Record Lows

Core inflation, which excludes volatile food and energy prices, dropped to a record low of 3.3% in February. This indicates that underlying price pressures in the economy are subdued. This is positive news for the RBI, which has been focusing on controlling core inflation to maintain price stability in the long run. The low core inflation suggests that the RBI’s monetary policy tightening measures, including raising interest rates, might be starting to show their effect.

Food Prices Remain a Challenge

Despite the positive signs of core inflation, food prices continue to be a concern. Food inflation remained above 6% in February, driven by rising prices of vegetables, cereals, and protein items. Prices of food and beverages continued to rise – above 7% for four months in a row – owing to a rise in prices of eggs, meat, fish and vegetables, but other primary categories like clothing, footwear, housing, and transport eased marginally.

This is a cause for worry, as food constitutes a significant portion of the average Indian household’s spending basket. High food prices can disproportionately impact low-income households, squeezing their budgets and impacting their overall well-being.

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