India Witnessed a Decline in Retail Inflation, Reaching a 10-Month Low of 4.85%. IIP Surged To a Four-Month High.
Summary:
India's
retail inflation decreased to 4.85 percent annually in March, down from 5.09
percent in the prior month. A Reuter’s survey had predicted a slight decline to
4.91 percent. This figure remains within the 2-6 percent tolerance band
established by the Reserve Bank of India (RBI).
In March,
India's annual retail inflation moderated to 4.85%, down from 5.09% in the
preceding month. This figure aligns closely with the projection of 4.91% in a
Reuter’s poll. Importantly, the observed inflation rate remains within the
Reserve Bank of India's (RBI) targeted range of 2-6%.
According to
the National Statistical Office (NSO), food inflation stood at 8.52% in March,
showing a decrease from 8.66% in February, as reported by PTI.
The
government hasn't released the official data yet because it's waiting for
approval from the election commission, according to Reuters, citing local
financial news service Informist. Reuters couldn't confirm this information
independently. India's national elections, happening in seven phases, start on
April 19.
On a
different note, industrial production increased to 5.7% in February, marking a
four-month high, up from 4.2% in the previous month.
In his
report on the outcomes of the first bi-monthly Monetary Policy Committee (MPC)
meeting of FY25, Reserve Bank of India (RBI) Governor Shaktikanta Das
emphasized the significance of inflation, likening it to "the elephant in
the room." He expressed cautious optimism, noting that inflation (the
elephant) seems to be returning to the desirable threshold (the forest) of 4
percent.
Governor Das
noted the downward trend in inflation, driven by favorable base effects.
However, he acknowledged the persistent pressure from service prices, which
have kept the key indicator at elevated levels compared to the targeted goals.
Despite a
decline in headline inflation to 5.1 percent for January- February 2024 from 5.7
percent in December, uncertainties persist due to erratic movements in food
prices.
Das remarked
that while headline inflation has decreased since its peak in December, the
continual strain from food prices is hindering the current disinflation
efforts, posing challenges to reaching the target.
After a
correction in January, food inflation rose to 7.8 percent in February, driven
mainly by increases in prices of vegetables, eggs, meat, and fish.
In February,
fuel prices continued their deflationary trend for the sixth straight month.
Additionally, the core Consumer Price Index (CPI), which excludes food and
fuel, showed disinflation, falling to 3.4 percent. This represents one of the
lowest levels in the current CPI series, with both goods and services
components experiencing a decline in inflation.
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