from India retail inflation fell to a three-month low of 5.10% in January 2024, data from the Ministry of Statistics and Program Implementation. According to government data, the Consumer Price Index (IPC) inflation rural was 5.34% and the urban CPI was 4.92%. The combined Inflation measured by CPI for January 2024 it was 5.10%. The final CPI data for December 2023 was 5.69%.
In January, food inflation, which represents almost half of the global basket of consumer prices, stood at 8.30%, compared to 9.53% in December.
Economist Vivek Kumar of Quanteco Research noted that with favorable seasonal support from food, fuel disinflation and subdued drivers of underlying inflation, global CPI inflation moderated to a 3-month low in Jan. 24. The moderation trajectory may persist if pressures on food prices remain contained in the short term. However, climate risks and potential adverse repercussions from escalating commodity trade costs following the Red Sea disturbance could introduce volatility into food prices,” he told Reuters.
Meanwhile, the Reserve Bank of India, maintaining its repo rate at 6.50% for the sixth consecutive meeting on February 8, highlighted “large and repetitive food price shocks” as a significant risk to the current disinflation trend.
“Overall inflation, after moderating to 4.9 percent in October, rose to 5.7 percent in December 2023. This was mainly due to food inflation, mainly vegetables. The slowdown in underlying inflation (CPI inflation excluding food and fuel) continued in both goods and services, reflecting the cumulative impact of monetary policy measures, as well as the significant slowdown in commodity prices. Uncertainties in food prices, however, continue to influence the trajectory of global inflation,” RBI Governor Shaktikanta Das said in his monetary policy statement.
“The MPC will carefully monitor any signs of widespread pressures on food prices that could waste gains in reducing underlying inflation. Monetary policy must continue to be actively disinflationary to bring inflation in line with the 4% target on a lasting basis. The MPC will remain steadfast in this commitment,” he added.
Economists polled by Reuters anticipated that India's retail inflation fell to a three-month low of 5.09% in January. A separate Reuters poll indicated that inflation would average 5.4% this fiscal and 4.7% next, aligning closely with the RBI's forecasts of 5.4% and 4.5%.
However, the RBI is expected to keep its policy rate unchanged at least until the end of June, before considering a 25 basis point cut in each of the third and fourth quarters, a relatively modest move compared to expectations. to the easing cycles of other global central banks. .