Getting a break

• A healthy winter harvest of vegetables led to a five-month low in food inflation in January, reducing India’s consumer price inflation to 4.3%.

• Urban consumers’ inflation eased to 3.9%, while rural consumers saw a moderate 4.6% price increase.

• This relief is particularly beneficial for the urban middle class, who has been awaiting relief from food inflation.

• The Reserve Bank of India (RBI) is relieved, as it expects an average inflation of 4.2% in 2025-26.

• However, the RBI’s neutral monetary policy stance may lead to further rate cuts and support for growth.

• Imported inflation, particularly on fuels and edible oils, could exacerbate household budgets.

• Edible oil prices have been rising sharply, with wholesale prices for edible oils jumping 33.1%.

• The government should consider slashing indirect taxes to alleviate price pressures.