(Reuters) – India’s retail inflation in March eased to 4.85% from 5.09% in February, government data showed on Friday.
A Reuters poll of 50 economists had forecast retail inflation at 4.91% for the month.
COMMENTARY:
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
“March CPI (consumer price index) inflation came in line with expectations amid continued softness in core inflation and impact of a cut in LPG cylinder prices. In the near term, likely higher food prices amid rising mercury level would be a key risk to watch out for. We maintain our call of the first rate cut by the Monetary Policy Committee (MPC) in Q3FY25 (third quarter of financial year 2025).”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The headline inflation for March has come in line with expectations. While core inflation continues to moderate, we remain wary of the heatwaves going ahead which could keep food inflation elevated and volatile in the summer months. Overall, we expect the MPC to remain on a wait-and-watch mode until 1HFY25 (first half of FY 2025), with possible easing likely towards the latter part of FY25 depending on the evolution of monsoons, crude oil prices and timing of the U.S. Federal Reserve’s rate easing cycle.”
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
“India’s March headline CPI came exactly in line with our expectations. Unsurprisingly, food inflation was the driver, and accounted for roughly 65% of the March inflation. That said, expectedly the real factor driving inflation lower in March is the recent announcement of a 2 rupees/litre reduction in the price of petrol and diesel and a 100 rupees/cylinder decrease in the price of LPG (cooking gas).”
“Interestingly, core inflation inched up a tad in March, after recording its 13th straight month of decline. Yet, at likely 3.5% Y/Y (from 3.44% to 3.48%), it would still be amongst the lowest post-pandemic readings.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Inflation moderated to 4.85% and was in line with expectations. Encouragingly, core inflation (excluding food and fuel) continues to show a sustained disinflationary trend. However, food inflation remains too high for comfort – at 8% plus – driven by higher vegetable and pulses prices. Going into the summer season, the food inflation momentum is expected to inch up in line with the seasonal trend.”
“The expectation of heat waves could present further upside risks to vegetable prices. This combined with the recent increase in commodity prices, supports the recent caution by the RBI on the disinflationary trend. We expect the central bank to cut rates not before Q3 FY25.”
DEVENDRA KUMAR PANT, CHIEF ECONOMIST, INDIA RATINGS & RESEARCH, GURUGRAM
“While the headline inflation is trending downwards, food inflation is still high. Food inflation impacts people from the bottom of the pyramid more than people from the upper-income group. The rural-urban inflation differential has widened. Vegetables and pulses inflation has remained elevated. The rainfall conditions and unfavourable base effect may aggravate vegetable inflation further at least till June 2024.”
“The Reserve Bank of India is expected to stay put on monetary easing at least in the first half of this fiscal.”
(Reporting by Nishit Navin, Dimpal Gulwani, Anuran Sadhu, Hritam Mukherjee and Manvi Pant; Editing by Sohini Goswami)
