Vaibhavi Khanwalkar gets in conversation with Moneycotrol's Deputy Executive Editor, Ravi Krishnan to find out the possible implications of the rate cut.
The FAO's food price index rose in January, taking it back to its September levels. Rising food prices could mean good news for the farm economy but is a problem for policymakers if inflation takes root
A CNBC-TV18 poll suggests that the November's CPI is seen between the range of 3.6-4 percent and food inflation is likely to come down to levels of 2.4-3.1 percent while vegetable deflation will continue and extend to over 7 percent against 5.7 percent in the October.
Reacting to CPI inflation data, top economists say it is much in line with expectation and they see no reason for the numbers to exceed 5 percent as had been cautioned by the Reserve Bank.
The previous low of 3.74 percent was recorded in August last year. The Consumer Price Index (CPI) based inflation was 4.39 percent in September this year, an upward revision from previous official record of 4.31 percent.
Wholesale prices of pulses, a common source of protein for most Indians, grew 21.80 percent in October compared with 23.99 percent in September.
Sharp fall in consumer price index gives the central bank an opportunity to weigh in a more than 25 bps rate cut in the next 6-9 months depending on global cues, Badrinivas NC, Country Treasurer and Head of Local Markets Treasury at Citi India told CNBC-TV18.
CNBC-TV18 poll pegs July Index of Industrial Production (IIP) at around 1.37 percent compared to 2.1 percent for the earlier month.
There should be a parity in taxes between processed and unprocessed food products, otherwise the very benefit of processed foods will not reach the consumers because of the price difference, it said.
Wholesale inflation soared to a 23-month high of 3.55 percent in July as vegetables, pulses and sugar turned costlier.
Data on wholesale prices suggests inflation in vegetables and fruits had risen in July, along with sugar uptrend. On IIP, there are estimates of broad-based growth and particularly strength in manufacturing taking the index to 7-8-month highs.
Higher minimum support price (MSP) will increase the availability of pulses and help contain food inflation, Finance Ministry said on July 7
With pulses inflation high at 34 percent, a better monsoon would reduce price pressure in lentils and in turn food inflation, a latest report has said
Measures include import of pulses from Myanmar and releasing more pulses from buffer stock in to the open market, reports CNBC-TV18's Rituparna Bhuyan.
Concerned over food inflation, Finance Minister Arun Jaitley will review the situation on June 15 and discuss steps to keep prices of essential commodities, including pulses, in check
As WPI inflation inched up to 0.79 percent in May, India Inc called for better supply-side management to rein in the higher vegetable prices, with experts anticipating a surge in food inflation going ahead
There are several reasons for this. Banks have to wait for their high cost deposits to mature. Also for the big banks with 40 percent in savings and current accounts, the rate cut has impact only on 60 percent of the deposits.
Retail inflation, as measured by the consumer price index (CPI) for April came in at 5.39 percent, while industrial output, measured by index of industrial production (IIP), fell to 0.1 percent.
The food price is expected to fall to 5.1-5.2 percent due to softening in the prices of vegetables and pulses, says Pranjul Bhandari, a Chief India Economist at HSBC.
The softening in CPI is likely to be due to lower readings on housing, clothing, transport, communication. IIP is likely to be in positive terrain with electricity generation and mining to aid growth. The CNBC-TV18 poll estimates core inflation to be sticky at around 4.9-5.0 percent.
The CPI has risen for the past 6 months from 3.7 percent to a 17-month high of 5.7 percent in January 2016. However, it is likely to decline in February led by food inflation mainly on easing seen in vegetable prices such as onions.
"From the chamber, we are requesting both the RBI and government to lower interest rates. But after talking to them, there are larger issues for which RBI is not keen for a drastic cut in rates," Assocham President Sunil Kanoria said.
The wholesale price index (WPI) for the month of December is likely to come in at -1.07 percent versus -1.99 percent seen for the month of November.
The CPI data has been consecutively hardening for the past four months and December is the fifth month. It has risen from levels of around 3.7 percent in July of 2015
According to CNBC-TV18 poll, December CPI is seen at 5.5% versus 5.41% seen in the month of November.