Summary of this article
Retail inflation rises to 3.21 per cent in February.
Higher food prices drive month-on-month rise in inflation.
Inflation remains within RBI’s 2–4 per cent comfort band.
Retail inflation moved up to 3.21 per cent in February compared to 2.74 per cent in the preceding month, driven mainly by higher food prices, showed government data released on Thursday.
However, the consumer price index (CPI) based retail inflation stayed within the Reserve Bank's target of 2-4 per cent. The government has mandated the central bank to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side.
The February inflation data is based on the new CPI series with base year 2024 released last month.
Food inflation in February rose sequentially to 3.47 per cent from 2.13 per cent in January, showed the data released by the National Statistics Office (NSO).
The major items that witnessed a high pace of price hike were 'silver, gold, diamond, platinum jewellery', coconut-copra, tomato, and cauliflower.
On the other hand, there was disinflation in garlic, onion, potato, arhar, and litchi.
Inflation rates for rural and urban areas were at 3.37 per cent and 3.02 per cent, respectively.
Aditi Nayar, Chief Economist, ICRA, said that the uptick in inflation was almost entirely led by the food and beverages (F&B) segment, which accounted for as much as 44 bps of the 47 bps rise in the headline print between these months.
Core inflation (CPI excluding F&B and electricity, gas and other fuels) remained unchanged at 3.4 per cent between January and February.
Nayar further said the ongoing geopolitical tensions in West Asia pose upside risks to the CPI inflation trajectory, if sustained for an extended period.
As per ICRA's analysis, every 10 per cent increase in average crude oil prices increases the CPI inflation by 40-60 bps, assuming that a full transmission into retail selling prices (RSPs) of auto fuels takes place.
"Heightened uncertainty transmitting from geopolitics into India's growth and inflation outlook supports the case for a (interest rate cut) pause in the upcoming April 2026 Monetary Policy Committee (MPC) meeting," Nayar said.
The next meeting of the MPC is scheduled for April 6-8.
Vivek Rathi, National Director- Research, Knight Frank India, said that CPI inflation reflects a mix of statistical adjustments and underlying price pressures.
"The revision of the CPI base year and the reduced weight of the food basket have altered the composition of the headline print. Meanwhile, firm price pressures in non-food and fuel categories, alongside rising precious metal prices, have contributed to inflation," Rathi said.
The NSO data further showed that highest inflation was in Telangana at 5.02 per cent and lowest in Mizoram at 0.1 per cent.
NSO said that the real-time price data were collected from selected 1,407 urban markets (including online platforms) and 1,465 villages.
