India's retail inflation dropped to 4.31% in January, from 5.22% in December, reaching a five-month low.
The rise in food prices slowed to 6%, down from 8.4% in December. However, edible oils and fruits saw a sharp price increase.
Urban inflation dropped to 3.87%, below the central bank's 4% target. Rural inflation remained higher at 4.64%, but it was lower than the 5.8% rise in December.
The Reserve Bank of India (RBI) reduced interest rates by 0.25%, expecting inflation to continue decreasing and to support economic growth.
The weakening rupee could raise the cost of imported goods like edible oils, fertilizers, and petroleum, impacting inflation.
Vegetable inflation fell to 11.3%, but fruits and edible oils saw steep price hikes (12.22% and 15.6% respectively).
Highest Inflation Items: Coconut oil, potatoes, coconut, garlic, and peas
Regional Inflation Variations: Kerala and Odisha had the highest inflation at 6.76% and 6.05%, while Delhi and Telangana had the lowest (around 2%).
The decline in inflation was mainly due to lower prices for vegetables, eggs, pulses, and other items like clothing and health services.
Urban vs Rural Food Inflation: Urban areas experienced a 5.5% rise in food prices, while rural areas saw a higher 6.3% increase.
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