India’s retail inflation falls to 2-year low to 8.1%

India’s Consumer Price Index-based inflation dropped to a 25-month low of 8.1% in February compared to 8.79% in January. Indian government data showed inflation rates for rural and urban areas were at 8.51% and 7.55% respectively. According to CPI data, the overall inflation in the food basket slowed to 8.57% in February from 9.9 per cent in the previous month. The rate at which vegetable prices increased eased to 14.04% as against 21.91% in January. Moderate easing of vegetable prices especially that of onions and potatoes helped retail inflation in February to settle at a 25-month low of 8.1%. Easing of inflation could guide the Reserve Bank of India to lower interest rate in the next monetary policy review slated for April 1. Industry has been demanding a cut in interest rates to boost economic growth, which has slowed to a decade-low level. Prior to the month under review, the lowest CPI was recorded in January 2012 at 7.65%.