Food prices push India's inflation to 3.21% in February

Retail inflation rose 3.21% year-on-year in February from 2.74% in the month before, driven by higher food prices, official data released Thursday showed. This is the second reading under the revised Consumer Price Index (CPI) series with 2024 as base year.

Inflation in the food & beverages segment stood at 3.4% in February, with rural areas recording 3.4% compared with 3.3% in urban areas.

“The uptick was almost entirely led by the food and beverages (F&B) segment, which accounted for as much as 44 basis points of the 47 bps rise in the headline print between these months,” said Aditi Nayar, chief economist at ICRA.


Across categories, personal care, social protection and miscellaneous goods and services saw the highest inflation of 19.6%. Next was paan, tobacco and intoxicants at 3.5%, followed by food and beverages (3.35%) and education services (3.33%).

The February data does not yet reflect the impact of rising tensions in the Middle East region. Economists expect March inflation to capture the initial effects, particularly through higher fuel costs, including LPG.

Madan Sabnavis, chief economist at Bank of Baroda, said March inflation could be in the range of 3.2-3.5%, based on current trends in food prices.

Food inflation rose to 3.47% in February from 2.13% in January. It stood around 3.5% each in rural and urban areas.

Across 358 tracked items, silver jewellery recorded the highest inflation of 160.8%, followed by gold/diamond/platinum jewellery (48.2%), coconut: copra (46.2%), tomato (45.3%), and cauliflower (43.8%).

The sharp increase in silver and gold prices also contributed to rise in headline inflation.

“This will be a factor that will continue to exert pressure in March too given the global uncertainty. Further, the rupee depreciation would also add to this cost,” said Sabnavis.

In contrast, prices declined for several items, including garlic, onion, potato, arhar, and litchi.

Inflation in rural areas rose to 3.4% in February, up from 2.7% in January, while urban inflation stood at 3% compared with 2.8% in the previous month.

Among states, Telangana recorded the highest inflation of 5.02%, followed by Andhra Rajasthan (3.53%), Kerala (3.5%), Andhra Pradesh (3.45%), and West Bengal (3.44%).