CPI Inflation Eases To 4.31% In Jan 2025: Government Data

Data shows that it is the lowest year-on-year inflation after August, 2024.

By Saurabh Shukla

New Delhi: The All India Consumer Price Index (CPI) for the month of January 2025 over January last year is 4.31% (Provisional), as per the Government data.

There is a decline of 91 basis points in headline inflation of January 2025 in comparison to December 2024. Data shows that it is the lowest year-on-year inflation after August 2024. Data also revealed that inflation in a dozen of the states is higher than the national inflation rates. Kerala (6.76), Odisha (6.05) and Chhattisgarh (5.85) top the chart.

Food Inflation
According to the data released by the Ministry of Statistics and Programme Implementation, the year-on-year inflation rate based on the All India Consumer Food Price Index (CFPI) for the month of January 2025 over January 2024 is 6.02% (Provisional). Corresponding inflation rates for rural and urban areas are 6.31% and 5.53%, respectively. All India inflation rates for CPI(General) and CFPI over the last 13 months are shown below. A sharp decline of 237 basis points is observed in food inflation in January 2025 in comparison to December 2024. The food inflation in January 2025 is the lowest after August 2024. If we talk about rural inflation, it shows a significant decline in headline and food inflation in the rural sector observed in January 2025. It is 4.64% (provisional) in January 2025 while the same was 5.76% in December 2024. The CFPI-based food inflation in the rural sector is observed as 6.31% in January 2025 in comparison to 8.65% in December 2024. Urban inflation also saw a sharp decline from 4.58% in December 2024 to 3.87% (Provisional) in January 2025 is observed in headline inflation of the urban sector. A similar decline is observed in food inflation which has decreased from 7.9% in December 2024 to 5.53% in January 2025.

Besides, the year-on-year Housing inflation rate for the month of January 2025 is 2.76%. The corresponding inflation rate for the month of December 2024 was 2.71%. The housing index is compiled for the urban sector only. The education inflation rate for the month of January 2025 is 3.83%. The corresponding inflation rate for the month of December 2024 was 3.95%. The health sector inflation rate for the month of January 2025 is 3.97%. The corresponding inflation rate for the month of December 2024 was 4.05%. It is combined health inflation for both the rural and urban sectors. while the year-on-year transport and communication inflation rate is 2.76%. The corresponding inflation rate for the month of December 2024 was 2.64%.

Rajani Sinha, Chief Economist, CareEdge told ETV Bharat that CPI inflation moderated to 4.3%, primarily due to a slowdown in food inflation. Meanwhile, core inflation continues to remain subdued, staying below the 4 per cent mark over the past year. While the recent depreciation of the Rupee could exert pressure via imported inflation, the relatively low core inflation should help mitigate any significant concerns.

She also added that however, it will be essential to monitor the double-digit inflation in edible oil. Contraction in rabi sowing of oil seeds and rise in global edible oil prices amid hike in customs duty can keep inflation in edible oils elevated. Furthermore, it will also be essential to closely monitor weather-related disruptions, such as heatwaves, whose frequency has increased in recent years, she added.

On the external front, while Brent crude oil prices remain subdued, the growth in industrial metal prices continues to exert upward pressure on global commodity prices. In January, Bloomberg commodity prices rose by 4.1% YoY, exiting six months of deflation primarily due to a strong momentum of certain base metals like copper, aluminium, tin and zinc. Going ahead, it is crucial to monitor geopolitical developments and global trade uncertainties closely, as these could significantly influence global commodity markets and supply chains. We expect inflation to average 4.4% and 4.5% in Q4FY25 and FY26 respectively. The moderation in inflationary pressure should support another 25-bps rate cut in the April Monetary Policy Committee (MPC) meeting, Sinha said.

Commenting on inflation data ICRA's Chief Economist Aditi Nayar said that the CPI inflation fell appreciably sharper than we expected to a five-month low of 4.3 per cent in January 2025, led primarily by food items, vindicating the unanimous rate cut by the MPC last week.

She added that, as per the early data for February 2025, average retail prices of 14 of the 22 essential commodities (barring wheat, sugar and most edible oils) softened on a sequential basis in the month. Looking ahead, ICRA believes that the growth-inflation outlook suggests that there is room for another 25 bps rate cut in either the April or the June 2025 meetings. The exact timing of the same would depend on the incoming data, global developments, and the movements in the USD/INR pair.

Items with the highest inflation
The top five items showing the highest year on year Inflation at the All India level in January 2025 are Coconut oil (54.20%), potato (49.61%), coconut (38.71%), garlic (30.65%), peas [vegetables] (30.17%).

Items withthe lowest inflation
The key items having the lowest year-on-year inflation in January 2025 are jeera (-32.25%), ginger (-30.92%), dry chillies (-11.27%), brinjal (-9.94%), LPG (excl. conveyance) (-9.29%)

States above the national average
Kerala 6.76
Odisha 6.05
Chhattisgarh 5.85
Haryana 5.10
Bihar 5.06
Karnataka 5.03
Tamil Nadu 4.94
Uttarakhand 4.85
Jammu & Kashmir 4.82
Assam 4.77
Uttar Pradesh 4.59
Madhya Pradesh 4.42