India’s headline retail inflation climbs to 6.1% in February 2022

The headline consumer price index (CPI) grew by 6.1% y/y in February 2022, from 6% y/y in the previous month, led by the continued increase in food prices. As the largest contributor to inflation, the CPI pertaining to food and beverages increased by 5.9% y/y, recording the highest growth in a six-month time frame. Core inflation, measured by inflation without food and fuel, remained unchanged at 5.95% y/y in February 2022. The CPI for miscellaneous items, which forms the second largest category, following food and beverages, also remained practically unchanged at 6.0% y/y, reducing only by 0.03pp, marking the fourth deceleration in a row. Housing prices turned upwards in February, growing by 3.6% y/y, after two consecutive months of slowdown. The inflation attributed to fuel and light, also moderated to 8.7% y/y, moving to a 10-month low. On the other hand, prices of clothing and footwear rose by 8.9% y/y in February, climbing to a record high since November 2013.

As the largest contributor to inflation, the CPI pertaining to food and beverages increased by 5.9% y/y

The components of the food and beverages basket grew did not follow a common trajectory with some components accelerating, some decelerating, and others staying constant. However, the CPI for major components such as cereals and products, and vegetables, grew by 4.0% y/y, and 6.1% y/y, respectively, and accelerated by 0.5pp and 1pp, respectively. On the other hand, inflation for milk and milk products registered a slowdown, to 3.8% in February, from 4.1% in the previous month. The categories of meat and fish, spices, and eggs registered an acceleration, while prices of oil and fats, as well as non-alcoholic beverages, eased. The categories of fruits, pulses and products, and sugar and confectionary, remained unchanged over the previous month.

The inflation in rural regions, which surpassed the urban inflation in January, continued to increase and stood at 6.4% y/y in February. Urban inflation turned downwards in February, registering a decrease to 5.75% in February, from 5.9% in the previous month. Considering inflation at the state level, Sikkim continued to have the highest inflation, at 8.3%, followed by West Bengal, Mizoram, and Uttar Pradesh, at 7.9%, 7.6%, and 7.0%, respectively. On the other side, Manipur recorded the lowest inflation, at 1.3%, followed by Meghalaya, at 2.8%, and Kerala, and Punjab, both at 3.9%.

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