In the latest data for February, the Consumer Price Index (CPI) reveals that retail inflation has continued to exceed the 5% mark. Notably, prices of essential food items, particularly vegetables, have witnessed a resurgence, driving up overall inflation. Tomatoes and pulses, in particular, have experienced notable price hikes, contributing to the upward trajectory in food prices. Additionally, there has been a discernible uptick in core inflation, indicating broader price pressures across various sectors of the economy.
Bank of Baroda’s economist, Dipanwita Mazumdar, predicts that the Consumer Price Index (CPI) is likely to stabilize at approximately 5.1% in February 2024. Although an elevated base might offer some relief, ongoing broad-based price pressures could hinder the headline number from approaching the 4% target, she suggests.
Rahul Bajoria, Managing Director & Head of EM Asia (ex-China) Economics at Barclays, anticipates a slight rise in CPI inflation to 5.3% in February. He notes a modest sequential increase in food and core prices, emphasizing that overall price pressures remain under control. Bajoria suggests that robust economic growth will likely keep the Reserve Bank of India (RBI) on the sidelines regarding rate cuts.
Rahul Bajoria, Managing Director & Head of EM Asia (ex-China) Economics at Barclays, predicts food inflation to reach 8% in February on a year-on-year basis, partly due to a low base. He expects food prices to rise by 0.3% month-on-month, reversing January’s 0.6% decline.
According to CRISIL’s Roti Rice rate, a monthly indicator of food plate cost, the cost of the representative home-cooked veg thali increased by 7% in February. This surge is attributed to a 29% and 38% year-on-year increase in onion and tomato prices, respectively. Conversely, the non-veg thali cost decreased by 9%, primarily due to a 20% year-on-year decline in broiler prices.
The Reserve Bank of India (RBI) has pegged CPI inflation at 5.4% for the fiscal year 2023-24, with the fourth quarter expected to be at 5%.
Sources: Business Today