India's retail inflation remained mostly unchanged from the previous month. The slight dip was despite an uptick in food prices and was aided by core inflation easing to record lows.
The Consumer Price Index-based inflation stood at 5.09% in February, as compared with 5.1% in January, according to data from the Ministry of Statistics and Programme Implementation, released on Tuesday.
A panel of economists polled by Bloomberg estimated Consumer Price Index-based inflation at 5.05% for the month. Inflation has been within the central bank's tolerance band of 4% (+/-2%) for three straight months since September.
Core inflation, excluding food and fuel, eased to 3.35% in February from 3.61% in January, according to Bloomberg. This is the lowest since, at least, 2018.
Food price inflation increased to 8.66% in February, as compared with 8.30% in January. Vegetable prices rose 30.25% year-on-year.
Inflation came in line with expectations, with the moderation in core inflation continuing to provide respite. We retain our view that the RBI will remain cautious on the volatile food inflation trajectory and hence prefer to remain in pause mode on rates until August policy. However, with the RBI already continuously fine-tuning liquidity and easing overnight rates closer to the repo rate, we see room for a shift in stance in the June policy.Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank
Inflation Internals
Cereal prices rose by 7.6%, as against 7.8% in January.
Inflation in meat and fish was 5.21%, compared with 1.2% in the previous month.
Inflation in eggs was at 10.7% against 5.6% last month.
Inflation in milk and milk products was at 3.86%, compared with 4.6%.
Prices of oils and fats declined 13.97%, compared to a rise of 15% in the previous month.
Vegetable prices rose 30.25% as against a rise of 27% last month.
Pulses inflation rose 18.9%, compared to a rise of 19.5%.
Clothing and footwear inflation was at 3.14% versus 3.4% in the previous month.
Housing inflation was at 2.88% versus 3.2%.
Vegetable inflation is the highest of the items and with onion prices going up again, it will continue to exhibit such tendencies, stated a research note by the Bank of Baroda. Besides, horticulture output this year is expected to be lower than last year, the note cautioned.
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