Retail inflation at 5.09% in Feb, food gets costlier

ITIP comes in at 3.8% in Jan, down from 4.2% in Dec

- PRIYANSH VERMA

INDIA'S RETAIL INFLATION based on the Consumer Price Index (CPI) stood at 5.09% in February, roughly the same level as in January. The easing of price pressures in manufactured goods, however, has been steeper, with "core" inflation falling to 3.3% the lowest in the current CPI series with base year 2012.

The easing of headline inflation to a four-month low was helped by the statistical effect of a high base, as price pressures rose sequentially due to costlier food, data released by the National Statistical Office (NSO) showed on Tuesday. In February 2023, CPI inflation was at 6.44%.

Separate data released by the NSO on Monday showed factory output growth, measured by the Index of Industrial Production (IIP), eased to 3.8% in January from 4.2% in December, thanks to a high base effect. In January 2023, IIP had grown 5.8% y-o-y.

The latest inflation print is largely in line with the consensus estimate. An FE poll of 17 economists last week projected the headline figure to come in at 5%.

Despite easing price pressures, economists do not expect policy repo rate cuts in the near term, with many expecting the rate cut cycle to begin with the August policy review.

THE REPO RATE currently stands at 6.5% and has remained unchanged since February 2023.