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Last Updated : Apr 12, 2018 07:50 PM IST | Source: Moneycontrol.com

Retail inflation cools off marginally to 4.28% in March

Retail inflation, measured by Consumer Price Index (CPI), is the main price gauge that the Reserve Bank of India (RBI) tracks

Shreya Nandi @shreyanandi15

India’s retail inflation came in at 4.28 percent in March as prices of vegetables and other food and beverages softened, data released by statistics office showed.45

The rate of increase in price rise slowed for the third consecutive month after hitting a fresh high of 5.2 per cent growth in December and 5.07 per cent in January due to unusual pick up in food prices and rise in domestic petrol and diesel prices. In February, prices grew at 4.4 per cent.

Retail inflation, measured by Consumer Price Index (CPI), is the main price gauge that the Reserve Bank of India (RBI) tracks. March’s data is an indication that prices are at a safe distance from the apex bank’s upper tolerance level of inflation at 6 per cent.

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Last week, the RBI brought down its January-March (2017-18) inflation projection to 4.5 per cent from 5.1 per cent. It also slashed CPI inflation for 2018-19 to 4.7-5.1 per cent in April-September 2018-19 and 4.4 percent in the next half of the year, including the impact of house rent allowance.

However, Deloitte India’s lead economist Anis Chakravarty said inflationary pressure is likely to remain tilted to the upside and may hover around the 5 per cent mark in the current financial year.

“Expected risks may arise from fiscal slippage, higher input costs and MSP (minimum support price) hikes, while financial sector volatility with respect to the normalization policy in the US may cause further tension,” Chakravarty, lead economist and partner at Deloitte India, said.

Consumer food price inflation, a metric to gauge changes in monthly kitchen costs, grew 2.81 per cent in March as compared with 3.26 per cent growth in February and 2.01 per cent a year ago.

“The downward growth movement of food inflation has had a larger-than-expected role to play in easing inflation prints and improved monsoon prospects are likely to keep food inflation concerns at bay, at least for some time to come,” Chakravarty said.

Vegetables prices grew 11.70 per cent in March as compared to 17.57 per cent a month ago, while prices of pulses continued to fall at (-)13.4 per cent as compared with (-)17.35 per cent a month ago.

Core inflation, which excludes price changes in food and energy sector, increased to 5.37 per cent compared to a revised 5.16 per cent in February, getting a push from education and other services components, Soumya Kanti Ghosh, State Bank of India’s Group Chief Economic Adviser said.

“On closer examination, we estimate 80 per cent contribution of the incremental core is explained by education and fuel component. One of the possible reasons for this is the seasonality in education tuition fees in the month of March,” Ghosh said.

Housing inflation remained almost flat at 8.31 per cent in March as compared to 8.28 per cent a month ago, while fuel inflation, which has seen an uptick since July, eased at 5.73 per cent in March from 6.80 per cent in February.

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First Published on Apr 12, 2018 07:40 pm
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