India's retail inflation slowed to 4.31 per cent in January, down from 5.22% in December, according to official data released on Wednesday. This drop is primarily due to slowdown in food price increases.

The Consumer Price Index (CPI)-based retail inflation was 5.22 per cent in December, and 5.1 per cent in January 2024.

The inflation in the food basket was 6.02 per cent, lower than 8.39 per cent in December and 8.3 per cent in the year-ago month.

The Reserve Bank of India (RBI) has been asked to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side.

This significant decrease in inflation is a positive sign for the Reserve Bank of India, which recently reduced the repo rate by 25 basis points to 6.25%. In October, retail inflation in India had surged to a 14-month high of 6.2%, with food inflation reaching a 15-month peak of 10.9%.

RBI typically aim for inflation to stay within a certain range, often around 4%. So, this decline brings inflation closer to the target range, which is a positive sign for the economy.

According to the data, the top five items showing the highest year on year inflation were coconut oil (54.2 per cent), potato (49.61 per cent), coconut (38.71 per cent), garlic (30.65 per cent), peas (30.17 per cent).

On the other hand, the key items having the lowest year on year inflation in January were jeera (-32.25 per cent), ginger (-30.92 per cent), dry chilies (-11.27 per cent), brinjal (-9.94 per cent), LPG (excluding conveyance) (-9.29 per cent).

"The significant decline in headline inflation and food inflation during the month of January, 2025 is mainly attributed to decline in inflation of vegetables, eggs, pulses and products, cereals and products, education, clothing and health," NSO said.

The data further showed that top five states which had higher inflation than the national average in January were Kerala (6.76 per cent), Odisha (6.05 per cent), Chhattisgarh (5.85 per cent), Haryana (5.1 per cent), and Bihar (5.06 per cent).