The food inflation in India likely fell below 5 per cent for the first time since June 2023, says a report by Union Bank of India.The report also noted that the India’s overall retail inflation is expected to have slowed down further in February 2025, falling below the 4 per cent mark, primarily due to a decline in vegetable prices.

It said “Food inflation has probably come below the 5 per cent levels for the first time after June’23”.The report estimated that the Consumer Price Index (CPI) inflation dropped to 3.94 per cent in February, compared to 4.31 per cent in January 2025.

It said “India CPI likely slowed down further to 3.94 per cent in Feb’25 as against 4.31 per cent in January’25 on account of further easing in vegetable prices, especially OPT (onion, potato & tomato)”.

Food inflation, a major component of retail inflation, is estimated to have fallen further to 4.66 per cent in February 2025, marking a significant decline. 

This is the first time since June 2023 that food inflation has likely dropped below the 5 per cent level. The month-on-month (m/m) food inflation remained in negative territory for the fourth consecutive month, aligning with the winter season when vegetable prices typically declined.

The impact of this downward trend is evident in the vegetables CPI, which fell sharply from 11.35 per cent in January 2025 to 3.89 per cent in February 2025. On-the-ground (OTG) prices of vegetables and pulses continued to ease during the month, contributing to the overall decline in food inflation.

The report highlighted that robust kharif production and seasonal winter corrections in vegetable prices have played a crucial role in lowering food inflation. However, prices of edible oils and sugar saw an upward trend during the same period.

On the other hand, core CPI, which excludes food and fuel, inched up to 3.87 per cent in February 2025 from 3.66 per cent in January 2025, primarily due to a rally in gold prices. 

Meanwhile, fuel CPI remained in a deflationary zone, helping to offset some of the inflationary pressures in other categories.The latest estimates indicate that India’s inflation trajectory is on a downward trend, bringing relief to consumers and policymakers. 

However, fluctuations in global commodity prices and domestic food supply dynamics will continue to influence future inflation trends.