Annual retail inflation in India was little changed at 5.09% in February 2024, compared to 5.1% in January and market forecasts of 5.02%. Food inflation, which accounts for nearly half of the overall consumer price basket, was 8.66%, slightly higher than 8.3% in January.
The ease comes amid a broad-based moderation in prices.
Despite retail inflation being within the mandated band of 2%-6%, uncertainties in food prices have worried policymakers.
Core inflation, which strips out volatile food and energy prices, came at 3.3% against 3.6% in January, the lowest since 2012.
At this rate, it is still above the RBI’s medium-term target of 4 percent. The central bank is keen to bring it down to the target on a durable basis, with Governor Shaktikanta Das saying in his statement in the minutes of the February 6-8 meeting of the Monetary Policy Committee (MPC) that the “‘last mile’ of disinflation…can be sticky”.
On February 8, the MPC left the repo rate unchanged at 6.5 percent for the sixth meeting in a row. While India’s interest rates are at their highest level in nearly eight years, economists think the continued better-than-expected growth performance of the economy could allow the MPC more time to ensure inflation, especially food inflation, falls to acceptable levels on a durable basis.
India’s industrial output rose 3.8% year-on-year in January, according to government data released on Tuesday. Analysts estimated a 4.1% rise in industrial output in January, according to a Reuters poll.
