February retail inflation seen at 5.08%: Mint poll
India's retail inflation is expected to come in at 5.08% in February, broadly unchanged from 5.10% recorded in the previous month, a median estimate of 20 economists polled by Mint showed. While prices of food items saw an uptick on a sequential basis, a favourable base effect is seen as offsetting the impact.
Among the economists polled by Mint, projections ranged from 4.90% to 5.50%, with only three of them expecting inflation to rise from the previous month. Official data is set to be released on 12 March.
“Our forecast reflects a month-on-month non-seasonally adjusted increase of 0.4% in prices following January's 0.1% drop," said Barclays in a report last week. “This reversal in direction is broadly a reflection of food prices increasing in February, while momentum in core prices is also likely to inch up." However, a favourable base effect is likely to keep inflation in check throughout the quarter.
"With the base effect having become more favourable in January-March 2024 and vegetable prices remaining soft during the winter months aided by the arrival of new crops, this is likely to help maintain a CPI average of 5.1% in the current quarter," said Kaushik Das, chief economist, India & South Asia, Deutsche Bank in a recent report. While inflation may remain contained in the current quarter, it is still significantly higher than the Reserve Bank of India’s (RBI’s) medium-term target of 4.0%, with volatility in food prices adding to uncertainty.
“Recurring food price shocks could interrupt the ongoing disinflation process, with risks that it could lead to de-anchoring of inflation expectations and generalisation of price pressures. Adding to these are the renewed flash points on the geo-political front, including
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