Moneycontrol
Last Updated : Mar 12, 2018 07:04 PM IST | Source: Moneycontrol.com

Retail inflation falls to 4.4 percent in February

Consumer food price inflation, a metric to gauge changes in monthly kitchen costs, fell to 3.38 percent in February as compared with a 4.58 percent growth in January.

Shreya Nandi @shreyanandi15

India’s retail inflation eased at 4.4 percent in February as prices of vegetables and other food and bevarages softened, data released by statistics office on Monday showed.

The rate of increase in price rise slowed for the second consecutive month after hitting a fresh high of 5.2 percent growth in December and 5.07 percent in January due to unusual pick-up in food prices and rise in domestic petrol and diesel prices.

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

Last month, the RBI’s Monetary Policy Committee (MPC) estimated inflation at 5.1 per cent in the quarter ended March, including the impact of house rent allowance. It also estimated the retail inflation for 2018-19 in the range of 5.1-5.6 percent during April-September and 4.5-4.6 percent in the second half of the year.

“Inflation has eased for the second consecutive month in February, raising downside risks to the RBI's projection for March 2018 quarter. Core inflation was relatively flat. This lowers pressure on the central bank to shift gears to a hawkish stance at the April review, with a similar tune likely to extend into June,” Radhika Rao, India Economist at DBS Bank said.

Consumer food price inflation, a metric to gauge changes in monthly kitchen costs, fell to 3.38 percent in February as compared with a 4.58 percent growth in January. Vegetables prices grew 17.57 percent in February as compared with nearly a 27 percent a month ago.

According to Aditi Nayar, Principal Economist at ICRA, the seasonal trend of rising food prices with summer inching closer, may prevent a further dip in prices in the ongoing month.

“While the prices of vegetables such as onions and tomatoes are continuing to correct, many other food items have recorded a sequential increase in prices so far in March, 2018,” Nayar said.

“The eventual rabi harvest, distribution of the 2018 monsoon and the operationalisation of the proposals made in the Union Budget for 2018-19, including the launch of Operation Green and the augmentation of minimum support prices (MSPs), would impact the trajectory of food inflation going forward,” she added.

Housing inflation remained flat at 8.28 percent in February as compared with 8.33 a month ago, while fuel inflation, which has seen an uptick since July, eased at 6.80 percent in February from 7.73 in January.

 
First Published on Mar 12, 2018 05:50 pm
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