Retail inflation rises to 3-month high of 5.03 % in Feb on higher food prices

New Delhi: Retail inflation rose to a three-month high of 5.03 per cent in February primarily on account of higher food prices, authorities knowledge confirmed on Friday. The Consumer Price Index (CPI) primarily based retail inflation stood at 4.06 per cent in January. The earlier high was witnessed at 6.93 per cent in November 2020.

The fee of value rise in the food basket accelerated to 3.87 per cent in February, as towards 1.89 per cent in the previous month, as per knowledge launched by the National Statistical Office (NSO). Inflation in the ‘gasoline and light-weight’ class remained elevated at 3.53 per cent throughout the month vis-a-vis 3.87 per cent in January.

The inflation print in ‘oil and fat’ phase moved up to 20.78 per cent from 19.71 per cent. For fruits, it grew to 6.28 per cent from 4.96 per cent, whereas in case of greens, the speed of deflation was softer at (-)6.27 per cent towards (-)15.84 per cent in the previous month.

Among others, milk and merchandise, pulses and merchandise, and eggs had inflation prints at 2.59 per cent, 12.54 per cent and 11.13 per cent respectively. The corresponding charges had been 2.73 per cent, 13.39 per cent and 12.85 per cent in January.

For well being class, the speed of value rise was higher at 6.33 per cent as towards 6.02 per cent and for ‘transport and communication’, it rose to 11.36 per cent from 9.32 per cent in January.

Sandeep Malhotra, CEO, IFFCO Kisan Sanchar stated, “Consumer price index has inclined up, primarily on account of food prices, particularly edible oils in-line with trends exhibited in international market. These prices may continue to be higher for sometime on back of easy liquidity prevailing in the market.”

Aditi Nayar, Principal Economist, ICRA Ltd, stated the CPI inflation has accelerated sooner than anticipated, and already reverted to 5 per cent.

“The core inflation hardened to a three-month high 5.7 per cent in February 2021 from 5.5 per cent in the previous month, reiterating that an uptick in commodity prices, rising demand, and emerging pricing power will keep inflationary pressures intact,” she stated.

While the primary spherical impression of higher gasoline prices on the CPI inflation is restricted, the second spherical impression is considerably bigger. Unless taxes on fuels are minimize to a sizeable extent, inflationary pressures are seemingly to rule out additional fee cuts, she stated.

“We expect the CPI inflation to rise further in March 2021, before recording a base-effect led dip in April 2021 reflecting the impact of the spike in inflation during the lockdown,” she added.

Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services, stated rise in CPI inflation is usually on the again of rise in food inflation and gasoline.

The rising world crude prices will proceed to add inflationary dangers going forward and CPI will stay elevated, he emphasised.

The Reserve Bank, which primarily components in the retail inflation whereas arriving at its financial coverage, has been requested to maintain CPI inflation at 4 per cent with a margin of 2 per cent on both aspect.

Currently, CPI is inside RBI’s goal vary however on the April assembly, the central financial institution could have to deal with with growing inflation and rising bond yields, as cascading impression might gradual India’s development, Gupta stated. 

“We continue to expect a status quo on the repo rate through 2021, with a dimming likelihood of an early change in stance from accommodative to neutral,” Nayar stated.