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India’s retail inflation rose to 3.21% in February, up from 2.74% in January, coming slightly above expectations.
What happened: the main push came from food prices, where inflation climbed to 3.47% from 2.13% a month earlier. Even though the rise isn’t alarming, it signals that price pressures are slowly building again after a brief cooling phase.
A key change: the government has also updated how inflation is measured. The CPI basket now has 358 items (vs 299 earlier) and uses 2024 as the new base year instead of 2012.
Interestingly, food now makes up less than 40% of the index, while non-food categories account for over 60%, reflecting how Indian consumption is shifting beyond basic essentials.
What it indicates: prices have now risen for four straight months, suggesting inflation is gradually inching up again. But the overall level is still well within the RBI’s comfort band, giving policymakers some breathing room.
What next: if food prices stay contained and global commodity prices don’t spike, inflation could remain manageable. But any supply shocks or energy price spikes could quickly push it higher again, something the RBI will be watching closely.
