The average Consumer Price Index (CPI) inflation in the country for the first seven months (July-January) of the fiscal year 2024-25 stood at 6.50%, a significant decline compared to 28.73% during the same period of the previous fiscal year.
On a month-on-month basis, the CPI rose by 0.2% in January 2025, compared to an increase of 0.1% in December 2024, and a higher 1.8% increase in January 2024.
Breaking down the data further, Urban CPI inflation decreased to 2.7% year-on-year in January 2025, down from 4.4% in December 2024 and a sharp 30.2% in January 2024. On a month-on-month basis, Urban CPI increased by 0.2% in January 2025, compared to a slight decrease of 0.1% in December 2024 and a substantial 1.8% increase in January 2024.
For Rural CPI, the year-on-year inflation stood at 1.9% in January 2025, a decrease from 3.6% in December 2024 and 25.7% in January 2024. Month-on-month, Rural CPI rose by 0.2% in January 2025, down from 0.3% in the previous month and 1.9% in January 2024.
The Sensitive Price Index (SPI) inflation, which reflects changes in the prices of essential items, decreased to 0.7% year-on-year in January 2025, compared to 4.2% in December 2024 and a much higher 36.2% in January 2024. On a month-on-month basis, SPI fell by 1.4% in January 2025, in contrast to a 0.8% increase in December 2024 and a 2.0% rise in January 2024.
The Wholesale Price Index (WPI) inflation also saw a decline, dropping to 0.6% year-on-year in January 2025, down from 1.9% in December 2024 and a significant 27.0% increase in January 2024. Month-on-month, the WPI increased by 0.2% in January 2025, compared to a decrease of 0.4% in December 2024 and a 1.5% increase in January 2024.
Sectoral Breakdown: Urban and Rural Inflation
Breaking down the data by urban and rural areas reveals a more nuanced picture of inflation trends. Urban CPI inflation stood at 2.7% on a year-on-year basis in January 2025, marking a notable decline from 30.2% in January 2024. This reduction highlights the effectiveness of measures aimed at controlling price increases in urban centers, which traditionally experience higher inflation due to concentrated demand for goods and services.
In contrast, rural areas experienced a more modest inflationary rise, with the rural CPI increasing by 1.9% YoY in January 2025, down from 25.7% in January 2024. This indicates that rural inflation, while lower than urban inflation, has still been impacted by the broader economic factors driving price increases.
On a month-on-month basis, both urban and rural CPI saw slight increases of 0.2% in January 2025. These figures reflect the ongoing adjustment in prices, which are often influenced by seasonal trends, supply chain dynamics, and shifting consumer demands.
Sensitive Price Index (SPI) and Wholesale Price Index (WPI)
In addition to the CPI, the Sensitive Price Index (SPI), which tracks the prices of essential items, reported a 0.7% increase YoY in January 2025, down sharply from 36.2% in January 2024. This dramatic decrease in SPI inflation underscores the reduction in the prices of key commodities and daily necessities that significantly affect households.
Meanwhile, the Wholesale Price Index (WPI) inflation also saw a decline, dropping to 0.6% YoY in January 2025. This marks a decrease from 27.0% in January 2024, further indicating a cooling in price pressures across the broader economy. On a month-on-month basis, the WPI saw a slight rise of 0.2%, suggesting that wholesale price changes are stabilizing but still susceptible to fluctuations.
Outlook for Inflation
The January CPI inflation figure of 2.4% provides a glimpse of a more stable economic environment compared to the tumultuous inflation spikes of the past year. While inflation remains a concern, the downward trend in both CPI and SPI points to a gradual but positive shift in the country’s inflation trajectory.
Experts suggest that continued efforts to manage supply chain disruptions, curb excessive demand pressures, and implement effective monetary policies will be crucial in maintaining this inflationary moderation. As the fiscal year progresses, policymakers will likely monitor inflationary trends closely, adjusting strategies to ensure that inflation remains under control while safeguarding economic growth.
Frequently Asked Questions
What is the Consumer Price Index (CPI) inflation for January 2025?
The Consumer Price Index (CPI) inflation for January 2025 was recorded at 2.4% on a year-on-year (YoY) basis. This reflects a moderate increase in the cost of living compared to the same month in the previous year.
How does the January 2025 CPI compare to January 2024?
The CPI inflation in January 2025 is significantly lower than the 28.73% CPI inflation recorded for the same period in January 2024. This marks a significant decline in inflation, signaling an easing of price pressures in the economy.
What caused the 2.4% YoY increase in CPI inflation in January 2025?
The 2.4% increase is largely driven by rising prices of certain goods and services, particularly in areas with higher demand during the month. Seasonal fluctuations and adjustments in supply chain dynamics can also contribute to these short-term price changes.
How did the month-on-month (MoM) CPI inflation perform in January 2025?
On a month-on-month basis, CPI inflation increased by 0.2% in January 2025, compared to 0.1% in December 2024. While the rise is modest, it suggests a slight upward trend in prices from one month to the next.
How did urban and rural inflation compare in January 2025?
Urban CPI inflation stood at 2.7% YoY in January 2025, significantly lower than the 30.2% recorded in January 2024. Rural CPI inflation was lower at 1.9% YoY in January 2025, down from 25.7% in the previous year, indicating that rural areas experienced less severe inflationary pressures.
What are the trends in Sensitive Price Index (SPI) and Wholesale Price Index (WPI) inflation?
The SPI inflation, which tracks essential items, decreased to 0.7% YoY in January 2025, a sharp drop from 36.2% in January 2024. Meanwhile, WPI inflation also decreased to 0.6% YoY in January 2025, down from 27.0% in the same month last year, indicating a general cooling in price pressures across essential and wholesale goods.
What does the decrease in inflation suggest for the economy?
The reduction in inflation suggests that price pressures are easing, which could lead to greater economic stability. This is beneficial for consumers as the cost of living becomes more manageable and for businesses, as it helps to stabilize production costs.
How does the current inflation rate compare to the previous fiscal year?
For the first seven months (July-January) of fiscal year 2024-25, the average CPI inflation stood at 6.50%, a sharp decline compared to the same period last year when it was 28.73%. This decrease indicates significant progress in controlling inflation.
Conclusion
The January 2025 Consumer Price Index (CPI) inflation, which stands at 2.4% year-on-year (YoY), marks a significant improvement from the extraordinarily high inflation rates observed in January 2024. This moderation in inflation reflects the success of various economic measures aimed at stabilizing prices, providing relief to consumers after a period of economic volatility.
The CPI’s moderate rise of 0.2% month-on-month (MoM) further signals that while inflationary pressures persist, they are more controlled and less volatile compared to previous years. Both urban and rural areas saw a significant reduction in inflation, with urban areas experiencing a 2.7% YoY increase and rural areas seeing a more modest 1.9% rise. Additionally, the Sensitive Price Index (SPI) and Wholesale Price Index (WPI) also showed decreases in inflation, indicating a broad-based stabilization in prices across essential goods and services.