Retail inflation, based on Consumer price index (CPI), was at 5.07 percent in January.
In another data released by the government, the industrial production for the month of January came at 7.5 per cent, up from 7.1 per cent in December.
In a sustained improvement in economic conditions, retail inflation in February eased as food prices softened, while industrial production soared in January.
Some consumer prices that skyrocketed in January probably returned to Earth in February, indicating fears of runaway USA inflation that jarred financial markets were overblown.
Fuel inflation, meanwhile, rose to 6.80% in February 2018 compared to 7.64% in January 2018. However, the cumulative IIP growth for April 2017-January 2018 stood at 4.1% compared to 5.0% in the corresponding period of the previous year.
RBI in this policy stated that the December bi-monthly resolution projected inflation in the range of 4.3-4.7% in the second half of 2017-18, including the impact of increase in HRA.
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The January IIP was also boosted by a higher offtake of consumer and capital goods.
Milk and its products too were less expensive with inflation print of 4.21 percent, cereals and products at 2.10 percent, meat & fish at 3.31 percent while for eggs the prices grew at a slower pace of 8.51 percent.
During January, 16 out of 23 industry groups in the manufacturing sector showed positive growth.
Prices of pan, tobacco and intoxicants rose by 7.34%.
Capital goods output in the month under consideration increased sharply by 14.6 per cent, as against a fall of 0.6 per cent in January a year ago.
Deloitte India Lead Economist Anis Chakravarty said: "Overall, the latest IIP data points towards signs of economic recovery as the negative effect of the disruptive shocks of a year ago appear to be on the wane".