NEW DELHI: Easing onion and potato prices pulled retail inflation in February to a 25-month low of 8.1 percent and is likely to increase the clamour for the Reserve Bank to cut interest rates in its next monetary policy.
Overall inflation in the food basket, including beverages, slowed to 8.57 percent in February from 9.9 percent in the previous month, according to Consumer Price Index (CPI) data released by the government of India on Wednesday.
The rate at which vegetable prices increased eased to 14.04 percent as against 21.91 percent in January.
Prior to the month under review, the lowest CPI was recorded in January 2012 at 7.65 percent, which inched up to 8.83 per cent in the following month. Retail inflation was at 8.79 percent in January.
Retail or consumer inflation also slowed in protein-rich items such as eggs, fish and meat to 9.69 percent in February versus 11.69 percent in January.
The rate of price rise slowed to 9.93 percent for cereals and related products from 11.42 percent in January.
However, the pace of price increases for milk and its products picked up in February to 10.37 percent from 9.82 percent in the previous month.
The prices of fruits, condiments and spices also rose faster last month.
The RBI, which has maintained a hawkish interest rate regime to tame inflation, is scheduled to announce the next monetary policy on April 1. Industry has been demanding a cut in interest rates to boost economic growth, which has slowed to a decade-low level.
Retail inflation has been easing for three months. The CPI data showed inflation rates for rural and urban areas were at 8.51 per cent and 7.55 per cent, respectively.
In January, the wholesale price inflation rate fell to an eight-month low. Wholesale inflation data for February will be out on Friday.