India core inflation showed signs of easing in the latest government data, offering some relief to policymakers, even as stubborn food prices continue to keep overall cost-of-living pressures elevated for households across the country.
Data released by the Ministry of Statistics and Programme Implementation (MoSPI) indicated that non-food, non-fuel inflation moderated during the month, reflecting softer price pressures in discretionary consumer goods and services. However, elevated prices of cereals, vegetables, and pulses offset these gains, keeping headline inflation under pressure.
India Core Inflation Shows Signs of Cooling
Core inflation, which excludes volatile food and fuel components, softened due to easing input costs, lower global commodity prices, and subdued demand in certain urban consumption categories. Economists view this trend as encouraging, as core inflation is often considered a better indicator of underlying price stability.
Analysts say moderation in India core inflation could provide policymakers with some breathing room, particularly as tight monetary conditions continue to weigh on consumer demand and private investment.
âCooling core inflation suggests that earlier policy tightening is working its way through the economy,â said a Mumbai-based economist.
According to the latest Consumer Price Index (CPI) data released by the Ministry of Statistics and Programme Implementation, core inflation has shown signs of moderation, even as elevated food prices continue to exert pressure on overall inflation levels.
Food Prices Remain the Key Concern
Despite easing core inflation, food prices remain a major challenge. Inflation in cereals, vegetables, and protein-rich items has remained elevated due to supply disruptions, uneven crop output, and rising transportation costs.
Vegetable prices, in particular, have shown sharp month-on-month volatility, affecting household budgets and limiting the overall decline in headline inflation. Rural consumers continue to feel the impact more acutely, given their higher dependence on food spending.
Economists caution that unless food inflation moderates sustainably, overall inflation could remain above comfort levels despite improvements in core metrics.
Impact on Monetary Policy Outlook
The divergence between easing core inflation and persistent food price pressures complicates the policy outlook. While moderating India core inflation strengthens the case for eventual monetary easing, policymakers are likely to remain cautious until headline inflation shows a sustained downward trend.
The Reserve Bank of India has repeatedly stressed that price stability remains its primary objective and that policy decisions will continue to be data-driven.
Market participants believe any shift toward a softer policy stance will depend heavily on food inflation trends and supply-side interventions by the government.
Household Budgets and Consumption Trends
Elevated food prices continue to squeeze household budgets, limiting discretionary spending even as prices of non-essential goods soften. This imbalance has resulted in uneven consumption patterns, with urban demand holding up better than rural spending.
Retailers and consumer goods companies have reported mixed demand trends, reflecting pressure on lower-income households and cautious spending behaviour.
Policy Measures and Outlook
The government has stepped up efforts to manage food prices through buffer stock releases, import adjustments, and supply-chain monitoring. However, experts say structural reforms in agricultural supply chains will be crucial for long-term price stability.
Indiaâs inflation trajectory now hinges on how quickly food prices stabilise. While easing India core inflation is a positive signal, sustained relief for consumers will require broader moderation across essential items.
Related: India Inflation Easing Brings Relief as Price Pressures Show Signs of Cooling
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