India's retail inflation fell to a seven-month low of 3.61% in February, down from 4.26% in January, offering some relief to consumers. This decline was steeper than expected, with inflation dropping by 65 basis points compared to January and reaching its lowest level since July 2024.

A significant factor contributing to this drop was a decrease in food prices. The Consumer Food Price Index (CFPI) inflation fell to 3.75% in February, a sharp drop of 222 basis points from January, marking the lowest food inflation since May 2023.

The data revealed that rural inflation was higher than urban inflation. In rural India, overall inflation decreased to 3.79% in February from 4.59% in January, while food inflation dropped from 6.31% to 4.06%. In urban areas, inflation dropped to 3.32%, and food inflation fell to 3.20%.

Key contributors to the decline in inflation were the falling prices of vegetables, eggs, meat, fish, pulses, and dairy products. However, some items like coconut oil, coconut, gold, silver, and onion saw significant price hikes.

Meanwhile, housing inflation rose slightly to 2.91%, and health inflation increased to 4.12%. Fuel and light inflation remained negative at -1.33%.