New Delhi, Feb 12 : India's retail inflation rate, based on the Consumer Price Index, fell to a five-month low of 4.31 per cent in January as prices of vegetables and pulses eased during the month bringing respite to household budgets, according to figures released by the Ministry of Statistics on Wednesday.

The easing of inflation reflects a steadily declining trend after having touched a 14-month high of 6.21 per cent in October. CPI inflation had declined to 5.48 per cent in November and 5.22 per cent in December.

The food inflation at 6.02 per cent in January 2025 is the lowest after August 2024.

'The significant decline in headline inflation and food inflation during the month of January is mainly attributed to the decline in inflation of vegetables, egg, pulses, cereals, education, clothing and health,' according to an official statement.

The top five items showing the highest year on year Inflation at the All India level in January are coconut oil (54.20 per cent), potato (49.61 per cent), coconut (38.71 per cent), garlic (30.65 per cent), peas (30.17 per cent).

The key items having the lowest year-on-year inflation in January 2025 are Zeera (-32.25 per cent), ginger (-30.92 per cent), dry chillies (-11.27 per cent), brinjal (-9.94 per cent), LPG (excl. conveyance) (-9.29 per cent).

The year-on-year fuel and light inflation rate for the month of January is -1.38 per cent. The corresponding inflation rate for the month of December 2024 was -1.33 per cent as fuel prices have been coming down.

RBI Governor Sanjay Malhotra announced on Friday a 25 basis cut in the policy rate from 6.5 per cent to 6.25 per cent in the monetary policy review to accelerate growth amid global uncertainties.

He said that inflation has declined and is expected to further moderate and gradually align with the RBI's target.

The monetary policy decision maintains a delicate balance between controlling inflation and pushing up the growth rate in a slowing economy,

The MPC also unanimously decided to continue with its neutral stance in monetary policy and will focus on inflation while supporting growth. This would provide flexibility to respond to the macroeconomic environment, Malhotra said.

Now with the retail inflation continuing with its downward trend, the RBI will have more headroom to follow a soft money policy to make more credit available to businesses and consumers which will propel economic growth.

/IANS