India’s retail inflation has dropped to a three-month low of 5.10 per cent in January, driven by slower price increases in certain food items, recent data shows.
While this decrease matches economists’ predictions, the Reserve Bank of India (RBI) is anticipated to maintain a cautious approach to interest rates, given that inflation remains above its target rate.
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, stated, “The CPI inflation came in slightly softer than our expectations,” according to Reuters. However, she highlighted uncertainties surrounding food inflation, which are likely to keep the central bank watchful in the short term.
Food inflation, a significant component of the overall consumer price basket, notably declined in January, reaching 8.30 per cent compared to 9.53 per cent in December. Prices of cereals and vegetables, in particular, experienced moderation, offering a glimmer of hope for alleviating inflationary pressures.
Despite these improvements, concerns persist regarding volatile food prices, influenced by factors such as climate variability and supply disruptions.
Gaura Sen Gupta, an economist at IDFC First Bank, pointed out the persistent weakness in housing inflation juxtaposed with robust urban demand.
India’s economic resilience has been evident, with growth surpassing expectations in recent quarters.
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