New Delhi, Feb 12 (UNI) India’s retail inflation measured by consumer price index (CPI) eased to 5.10% in January 2024 on an annual basis primarily on the back of softening food prices.
Retail inflation in December 2023 was 5.69% while it was 6.52% in January 2023.
As per data released by Ministry of Statistics & Programme Implementation (MoSPI) on Monday, food inflation in the month of January 2024 was 8.30% as against 9.53% in December 2023.
As per official data, retail inflation in rural areas was 5.34% in January this year. This was higher compared to 4.92% in urban areas.
Vegetable prices showed signs of cooling off in the month of January this year with vegetable inflation staying at 27.03% as against 27.64% in December 2023. Fuel and light inflation contracted (-) 0.60% in January this year as against (-) 0.99% contraction in the previous month.
With retail inflation staying below Reserve Bank of India (RBI)’s upper tolerance band, the central bank is likely to continue with the status quo in policy repo rate for now.
As widely expected by markets and policy-watchers, the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) in its meeting last week kept the policy repo rate unchanged at 6.50%.
Making the bi-monthly policy statement, RBI Governor Shaktikanta Das said that monetary policy would continue to be actively disinflationary to align inflation to the target of 4% on a durable basis.
“The MPC will remain resolute in this commitment,” Das said.
The central bank is tasked to maintain price stability in the country and mandated to ensure retail inflation at 4% with a margin of 2% on either side.
Commenting on January inflation number, ICRA Chief Economist Aditi Nayar said that she expects the CPI inflation to ease below 5% in February-March 2024, and average at 5.3% in FY2024.
“Thereafter, we estimate the CPI inflation at 4.6% in FY2025, broadly in line with that of the MPC, based on the assumption of a normal monsoon. The MPC’s expectations around the growth outlook and its forecast that the CPI inflation will moderate while remaining above the 4% target, reinforces our view of a likely shallow rate cut cycle.
We foresee cumulative rate cuts of 50-75 bps, commencing in the August 2024 meeting, and a stance change in the preceding review, after there is some visibility on the monsoon turnout,” she said.
