Retail inflation likely eased further to 3.9% in February: Mint poll

Subscribe to enjoy similar stories. India's retail inflation likely eased further to 3.9% in February from 4.3% in the previous month, driven by a continued decline in food prices, according to a Mint poll of 25 economists. This would mark the fourth consecutive month of cooling inflation and help make a case for another rate cut by the Reserve Bank of India (RBI) in April.

Economists polled by Mint projected the Consumer Price Index (CPI) inflation in a wide range of 3.6-4.4% in February. The official data is scheduled to be released on 12 March. Food inflation, which accounts for nearly 40% of the inflation basket, has declined considerably over the last two months, owing to the arrival of the winter crops.

Vegetable inflation, which had surged to nearly 40% in September and October last year—influencing headline inflation considerably—fell to 11.4% in January. The declining trend continued in February. Meanwhile, core inflation, which excludes volatile food and fuel and light groups, is expected to inch up again in February but may not pose a risk.

"The reversal of spikes in volatile food items and fading of one-off shocks such as in edible oil prices suggests a continued fall in headline inflation, which is now undershooting RBI forecasts," said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. If the poll prediction proves accurate, the average for January and February would be 4.1%, slightly lower than the RBI’s projection of 4.4% for the quarter ending March. Unless inflation in March rises to at least 4.7%, inflation for the quarter will undershoot RBI’s projection.