India’s retail inflation eased to 5.10 per cent on an annual basis as against a four-month high of 5.69 per cent in December, data released by the Ministry of Statistics & Programme Implementation showed on Monday. A Reuters poll of 44 economists had forecast a three-month low of 5.09 per cent.The number has remained within the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent.Inflation rate in rural and urban areas stood at 5.34 per cent, 4.92 per cent, down from 5.93 per cent and 5.46 per cent seen in the same month a year ago.The sharp moderation in inflation can be attributed to cooling of food prices. The food inflation for January stood at 8.30 per cent versus 9.53 per cent recorded in December.The vegetable inflation eased marginally to 27.03 per cent from 27.64 per cent in December. In addition, the fuel and light inflation contracted (-)0.60 per cent as against (-)0.99 per cent contraction in the month before.On a sequential basis, the inflation rate witnessed a contraction of (-)0.11 per cent as against a contraction of (-)32 per cent, according to the data released. The Reserve Bank of India (RBI), which held its repo rate at 6.50 per cent for a sixth consecutive meeting on February 8, highlighted “large and repetitive food price shocks” as one of the biggest risks to the ongoing disinflation trend.In it’s February meeting, the RBI Monetary Policy Committee (MPC) left its inflation forecast for FY24 unchanged at 5.4 per cent, despite food price rise concerns, uncertainty around crude costs even amidst a recent slump and chances of domestic growth momentum creating demand pressure on inflation.The central bank had also stated that it expects inflation to be 5 per cent in the current quarter ending March 31.”Food price inflation continued to impart considerable volatility to the inflation trajectory,” RBI Governor Shaktikanta Das had said while announcing the policy decisions. “In contrast, the deflation in CPI fuel deepened and core inflation (CPI inflation excluding food and fuel) moderated to a four-year low of 3.8 per cent in December.”Geopolitical events and their influence on supply chains, along with the volatility in international financial markets and commodity prices, are ‘key sources’ of upward risks to inflation, the RBI had said. The collective impact of policy repo rate increases is still making its way through the economy, it added.For Q1FY25, Q2FY25, Q3FY25 and Q4FY25, the inflation reading was pegged at 5 per cent, 4 per cent, 4.6 per cent and 4.7 per cent respectively, assuming a normal monsoon next year, by the RBI.RBI’s Das has often repeated that the RBI is determined to bring down inflation to 4 per cent. Recently, he expanded the scope of his frequently cited ‘Arjuna’ analogy to convey that it takes into account various factors beyond just inflation when shaping policies, while flagging that headline inflation remains vulnerable to recurring and overlapping shocks due to overseas and domestic factors.India’s policymakers have been working to keep inflation in check through a mixture of monetary and fiscal interventions, be it through rates or export curbs.Informing the Parliament of the measures taken to keep inflation stable, Finance Minister Nirmala Sitharaman, while presenting Interim Budget 2024-25 in the Lok Sabha said “retail inflation is stable and has come down within the tolerance band as a result of the steps taken by the government to check price rise, especially in perishable commodities.”