Retail Inflation Eases With Moderation In Food Prices
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
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By Linus Garg
First publised on 2023-04-13 07:29:36
About the Author
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
View all posts by this Author
Against the
backdrop of consistently gloomy news on the global economic outlook (the IMF
had cut Indiaâs GDP growth rate in FY24 to 5.9% just a day earlier), the
National Statistical Office released cheerful data on Wednesday which showed
that while industrial output rose marginally in February, retail inflation
dipped to 5.7% in March from 6.4% in February, mainly due to moderation in food
prices. While rural inflation was at 5.5%, it was 5.9% in urban areas.
If
inflation remains under control, experts see the RBI maintaining the pause in
key interest rate hike and bat for growth. After the April meeting when the MPC
paused the rate hike, RBI governor Shaktikanta Das had pointedly said that the
apex bank was watching the situation and the policy decision was not a pivot as
the bank will wait for a durable decline in inflation closer to target. Experts
now feel that with food prices moderating and expected to moderate further in
view of the expected bumper rabi crop, the RBI is likely to maintain status quo
in key interest rates.
The Index
of Industrial Production (IIP) rose to 5.6% in February, up from 5.5% in January.
Although this is an insignificant rise, the good news is that experts feel that
in terms of rolling three-month average, the overall growth in IIP is still
fairly steady. This shows that although industrial output is not galloping, it
is not falling too and demand is fairly steady across sectors.
But with the
International Energy Agency saying that oil prices are set to rise, it remains
to be seen whether another round of hikes in petroleum prices and the
consequent hike in transportation costs will add to inflationary pressures.
There are conflicting reports on the monsoon too. If inflation moderates
further after the harvesting of the rabi crop, it will be good news for the
economy.
