India’s retail inflation data for January 2024 may have slowed to a three-month low of 5.09% due to moderating food price rise and favorable base effect point.To a Reuters polling. Core inflation, which excludes food and energy prices, is also likely to slow to 3.7%.
In December 2023, India’s retail inflation based on the Consumer Price Index (CPI) has risen to a four-month high of 5.69%. Although the CPI inflation rate of 5.69% is still far from the Reserve Bank of India’s medium-term target level of 4%, it is still within the tolerance range of 2% to 6%.
Meanwhile, the Reserve Bank of India held its sixth consecutive meeting on February 8 and maintained the repo rate at 6.50%. The meeting highlighted “large and repeated food price shocks” as one of the biggest risks to the current deflationary trend.
Food prices, which account for about half of the Consumer Price Index (CPI) basket, fell last month after surging since November 2023, according to the Office for National Statistics. Reuters Economist poll.
The survey of 44 economists showed that headline inflation, measured by the annual change in CPI, is expected to fall to 5.09% in January from 5.69% in December.
That would still be above the 4% midpoint of the central bank’s medium-term target of 2-6%.
Alexandra Hermann, chief economist at Oxford Economics, said: “We expect inflation to moderate in India in January as food price growth remains high but falls .”
“Base effects, weak food price growth and lower oil prices due to weak market fundamentals should further ease headline inflation in the coming months.”
Inflation averaged 5.4% this fiscal year and 4.7% next fiscal year. Reuters Polls show that it is close to the 5.4% and 4.5% predicted by the Reserve Bank of India.
Core inflation, which strips out volatile food and energy prices, was likely to fall further to 3.70% in January from a four-year low of 3.80% in December, according to the median forecast of 22 economists.
The Indian government does not release core inflation data.
Suman Chowdhury, chief economist at Acuite Ratings and Research, said: “Core inflation has dropped to the comfort zone below 4% and we believe that despite pressure on food inflation, if any, in the short term The situation is likely to remain stable.”
Nonetheless, the Reserve Bank of India is expected to keep the key policy rate on hold until at least the end of June, before cutting it by 25 basis points each in the third and fourth quarters, which is relatively modest compared with expectations for other global central bank easing cycles. Small.
(Input from agency)
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