Food Inflation Drops To 21-Month Low At 3.75% In February

Retail food inflation in India eased for the fourth consecutive month, reaching a 21-month low of 3.75% in February 2025, down from 5.97% in January. This decline is attributed to the arrival of the winter harvest, which has helped bring down prices of key commodities such as vegetables, pulses, and spices. The Consumer Food Price Index (CFPI) also fell by 2% compared to January, reflecting an overall cooling trend in food prices.

Despite the overall decline, inflation in certain essential food items remained high. Onion and potato prices surged by 30.42% and 26.36%, respectively, on a year-on-year basis in February. However, tomato prices saw a significant drop, declining by 28% compared to the previous year. Vegetable inflation as a whole declined by 1.07% last month, a sharp contrast to the 11.35% inflation recorded in January.

While cereal inflation remained in single digits at 6.1%, wheat prices continued to rise, recording a 9.17% increase year-on-year. On the other hand, rice prices softened due to a bumper harvest, helping keep cereal inflation in check. The government’s efforts to stabilize wheat prices by offloading close to 3 million tonnes (MT) of wheat from the Food Corporation of India’s surplus stock have played a crucial role in containing future price increases.

Key concerns

One of the key concerns remains the inflation in edible oils, which stood at 16.36% in February. Mustard oil and refined oil prices surged by 19.48% and 22.23%, respectively, on a year-on-year basis. Experts attribute this rise to the volatility of the Indian rupee, which has increased the cost of imported edible oils. India relies heavily on edible oil imports, covering nearly 58% of its domestic consumption.

Pulses, which have been witnessing high inflation since mid-2023 due to lower output, showed some relief. Inflation in pulses dropped to 0.35% in February from 2.59% in January. However, retail inflation in pulses has remained in double digits since June 2023. The gram split variety of pulses recorded an inflation rate of 13.8% last month, while the price rise in arhar (tur dal) was in the negative zone at -5.85% due to a high base effect.

Economists warn that the current drop in food inflation may be short-lived as higher-than-normal temperatures could impact the rabi harvest, potentially leading to price increases in the coming months. “There was a sharp fall in inflation for vegetables, pulses, and spices, which contributed to the base effect. However, the problem areas appear to be fruits and vegetable oils. The latter has also been affected by the volatile rupee, which has pushed up import costs,” said Madan Sabnavis, chief economist at Bank of Baroda.

Meanwhile, inflation in the meat and fish category remained low at 2.11% in February, with chicken and egg prices declining by 1.86% and 3.01%, respectively. Milk price inflation was moderate at 2.68% year-on-year.

While food inflation has shown signs of easing, experts remain cautious about future trends, especially given the climatic uncertainties and global commodity price fluctuations.

ALSO READ: RailTel Dividend 2025: Navratna PSU Stock Rewards Shareholders With Second Interim Dividend