India Inflation Softens On Cooling Food Costs

RTT Staff Writer•Monday, February 12, 2024•1 min read

India consumer price inflation softened to a three-month low in January on moderating food price growth, data from the Ministry of Statistics and Programme Implementation showed Monday.

The consumer price index posted an annual growth of 5.10 percent, weaker than the 5.69 percent increase in December, which was the fastest in four months. In the same period last year, inflation stood at 6.52 percent.

The annual rate almost matched economists’ forecast of 5.09 percent. Inflation remains within the tolerance band of 2-6 percent.

Data showed that food inflation weakened to 8.30 percent in January from 9.53 percent in the previous month.

On a monthly basis, the consumer price index dropped 0.11 percent and food prices declined 0.73 percent.

Last week, the Reserve Bank had decided to keep the repo rate unchanged at 6.50 percent and also to remain focused on withdrawal of accommodation.

The central bank had retained its headline inflation outlook for the current fiscal at 5.4 percent. For 2024-25, inflation was seen at 4.5 percent.

Capital Economics’ economist Shilan Shah said inflation is set to grind lower and probably reach the 4 percent midpoint of the tolerance band.

“…the RBI won’t be ready to pivot just yet, but monetary loosening will come onto the agenda in the second half of the year,” said Shah. The economist expects the first rate cut in the third quarter.

Elsewhere, official data showed that industrial production growth improved to 3.8 percent in December, while the rate was forecast to remain stable at 2.4 percent.

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