Food drives descent, but core soars to a 15-month high

• Consumer Price Index (CPI) inflation dipped below the Reserve Bank of India’s (RBI) 4% target to a seven-month low of 3.6% in February from 4.3% in January, driven by a slide in food inflation to 3.7%, the lowest reading since May 2023.

• While the on-month momentum in a number of food categories slowed, a high base effect also played a role in lowering food inflation. Prices of vegetables, eggs, pulses and spices fell on-year while many others saw softer inflation.

• However, a lift in edible oils inflation to a 34-month high of 16.4% and fruits inflation to decadal high of 14.8% capped the downside.

• On the other hand, core inflation crossed 4% for the first time since November 2023 and touched 4.1% (vs 3.6% in January), as surging gold and silver prices pushed up inflation in the personal care and effects category.