NewsPatrolling.com ;“The CPI (retail) inflation for the month of February 2018 came in lower at 4.44% compared to 5.07% in January 2018. Over the last 2 months, the CPI inflation has tapered by nearly 100 basis points, which should give the RBI some comfort on the price front. The lower CPI inflation was led by sharply lower food inflation which came in at 3.26% for the month of Feb compared to 4.71% in January 2018. The only matter of worry is that rural inflation remains much higher than urban inflation for the month of February.
Within the food basket, pulses and vegetables have shown a diverse trend. While vegetables have shown positive inflation at 17.57%, pulses continue to show negative inflation at -17.35%. Outside of the core food basket, some of the other items of inflation continue to be quite elevated. For example, housing inflation is at 8.28%, fuel & lighting at 6.81% and clothing & footwear at 5%. The secondary effect of fuel prices continues to have an impact on inflation and any rise in crude oil prices globally could directly impact non-food inflation levels in India.
The inflation is still above the RBI comfort level of 4% annual inflation and the combination of higher MSP for farmers and higher crude prices will keep CPI inflation above the 4% mark. That means, any rate cuts for now appear to be ruled out unless inflation shows a clear signal of trending further down. For the trajectory of the CPI inflation going ahead, a lot will depend on the Meteorological forecasts and the actual Kharif output this year.”
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