Good News for India: In February, the inflation rate has come down to 3.61 percent. At the same time, the good performance of the manufacturing sector has increased by five percent in the country’s industrial production (IIP) in January this year. Industrial production measured in terms of industrial production index increased by 4.2 percent in January 2024. This has given India two -way good news.
The main reason for the decrease in retail inflation is to reduce the rate of increase in prices of vegetables and protein -rich goods. This has made a scope for the Reserve Bank of India to cut the interest rate for a second time next month. The consumer price index based retail inflation was 4.26 percent in January and 5.09 percent in February 2024. The data released by the National Statistics Office (NSO) shows that the inflation rate for February 2025 was 3.75 percent.
It states, “Food inflation has seen a rapid decline of 222 basis points in February 2025 compared to January 2025. Food inflation is the lowest since May 2023 in February 2025.” The NSO stated that significant decline in main inflation and food inflation during February mainly vegetables, eggs, meat and fish, pulses and products; And is due to a decline in inflation of milk and products.
RBI can deduct interest rate
RBI has been entrusted with the responsibility of maintaining retail inflation at 4 percent (+/- 2 percent). The RBI has reduced the short -term lending rate (repo) in the last month to reduce concerns on the inflation front. The central bank is scheduled to announce the next set of bilateral monetary policy on 9 April. There has been a scope for the Reserve Bank of India to cut the interest rate for a second time next month.
At the same time, according to the official data released on Wednesday, the government has revised the temporary estimate of 3.2 percent increase in December 2024. It has now been revised to 3.5 percent. According to data from the National Statistics Office (NSO), manufacturing sector production increased by 5.5 percent in January 2025, which increased by 3.6 percent in the same month a year ago.
The increase in mining production was reduced to 4.4 percent, which was six percent in the same month a year ago. The increase in power generation was slow in January, 2025 to 2.4 percent, which was 5.6 percent in this month a year ago. During the first 10 months (April-January) of the current financial year, the growth rate in IIP was reduced to 4.2 percent, which was six percent in the same period a year ago.