The annual rate of inflation based on the Wholesale Price Index (WPI) is 2.38 per cent for the month of February, according to data released by the Ministry of Commerce and Industry on Monday.

The month-over-month change in WPI for the month of February was a marginal 0.07 per cent higher compared to the corresponding figure of 2.31 per cent during January.

“The positive rate of inflation in February is primarily due to increase in prices of manufacture products and food articles compared to the same month of the previous year,” according to the official statement.

Month-on-month food inflation in February declined as prices fell by 2.05 per cent compared to January this year.

However, WPI inflation in the fuel and power group increased by 2.12 per cent in February over January.

Similarly, the index for manufactured products group increased by 0.42 per cent in February compared to January.

The final WPI inflation rate for the month of December has been revised to 2.57 per cent, the figures showed.

Meanwhile, the year-on-year inflation rate based on the Consumer Price Index (CPI) has eased to a 7-month low of 3.61 per cent in February this year, which is 0.65 per cent lower than the corresponding figure for January, as food prices came down further during the month, according to figures released last week,

The Reserve Bank of India (RBI) uses the CPI inflation rate to formulate its monetary policy as this is based on the actual prices that consumers pay in the market.

The food inflation in February has come down to the lowest level since May, 2023 and is 222 basis points lower in comparison to January, according to the official statement.

Prices of fuel came down during the month, easing the burden on household budgets with inflation being recorded at -1.33 per cent during February.

As the retail inflation is continuing with its downward trend and has fallen below the RBI’s targeted level of 4 per cent, the central bank will have more headroom to go for a rate cut to propel economic growth and create more jobs.

RBI Governor Sanjay Malhotra last month announced a 25 basis points 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 of 4 per cent.

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.