Overall inflation in the food basket, including beverages, slowed to 8.57 per cent in February from 9.9 per cent in the previous month, according to Consumer Price Index (CPI) data released by the government today.
The rate at which vegetable prices increased eased to 14.04 per cent as against 21.91 per cent in January.
Prior to the month under review, the lowest CPI was recorded in January 2012 at 7.65 per cent, which inched up to 8.83 per cent in the following month. Retail inflation was at 8.79 per cent in January.
Retail or consumer inflation also slowed in protein-rich items such as eggs, fish and meat to 9.69 per cent in February versus 11.69 per cent in January.
The rate of price rise slowed to 9.93 per cent for cereals and related products from 11.42 per cent in January.
However, the pace of price increases for milk and its products picked up in February to 10.37 per cent from 9.82 per cent 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.
UPASNA BHARDWAJ, ECONOMIST, ING VYSYA BANK, MUMBAI
"Marginal pick up in industrial production along with a 20 basis point easing in core inflation provides some hopes of stabilisation in the macro space. However, we do not see this data affecting RBI's policy decision of maintaining a status quo next month."
A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI
"The trend to look at is the core CPI. This time core has come off. And if you look at the components also, it looks like housing inflation is showing signs of slowing down, so that's a positive.
"Food inflation will turn more volatile, and therefore, the headline (inflation) can go up from here, but the trend in core is what will matter for the medium-term trajectory. I think the RBI is going to maintain the status quo."
RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI
"Similar to the trend in the last two months, industrial growth is primarily driven by basic goods, intermediate goods and consumer non-durables.
We were expecting growth to enter the positive zone albeit at a very low level, as is being signalled by the PMI for manufacturing.
CPI inflation is in line, but don't think the trend is sustainable because sooner than later the current crop damage due to the untimely rains is going to impact the food price trajectory.
On April 1 (at the central bank's policy review) definitely there will not be any rate cut, but today's observations are not enough to give indication for any concrete change in the policy stance."
ANJALI VERMA, ECONOMIST, PHILLIPCAPITAL, MUMBAI
"Both CPI and IIP (industrial output) have come in better than expectations.
The decline in food prices has continued for the third consecutive month. However, with recent rains, there may be a rise in fruit and some vegetable prices going ahead.
Moreover, with the base effect coming into play, there is a possibility that inflation may rise again in the coming months."