Feb retail inflation edges up to 5.37% on costlier food items

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New Delhi | Updated: March 12, 2015 7:27:54 PM

The retail inflation rose to 5.37 per cent in February on higher prices of food items, including vegetables and beverages...

Inflation, Inflation CPI, retail inflationThe country’s statistics department started using 2012 as the new base year in place of 2010 for measuring retail prices last month. (Reuters)

The retail inflation rose to 5.37 per cent in February on higher prices of food items, including vegetables and beverages.

The consumer price based retail inflation (consumer price index or CPI) for February is calculated with a new base year of 2012.

For January, the retail inflation with a new base year has been revised upwards to 5.19 per cent from 5.11 per cent estimated earlier.

The CPI in February last year was 7.88 per cent.

Food inflation during the month under review rose to 6.79 per cent from 6.06 per cent in January. The rise in inflation in food items was mainly due to costlier vegetables, pulses and beverages.

The rate of price rise in vegetables went up by 13.01 per cent; in pulses and products by 10.61 per cent, while the same in the food & beverages category rates moved up by 6.76 per cent.

Inflation in fruits was 8.93 per cent.

For rural segment, retail inflation was 5.79 per cent in February 2015 and that for urban centres 4.95 per cent.

Among others, retail inflation in cereals and products grew to 2.91 per cent, meat and fish at 5.05 per cent. For pan, tobacco & intoxicants category, the rate of price rise was 9.24 per cent in February.

For eggs, inflation dipped further to 1.06 per cent during the month over a negative price rise of 0.24 per cent in the previous month. Likewise, for category under transport and communication, inflation fell to 2.16 per cent.

“Retail inflation has come in line with market expectations. We expect inflation to move in a narrow trajectory going forward and stay within the comfort zone of the RBI and the government.

“This would give the RBI adequate headroom to substantially cut policy rates in the next fiscal year, which will in turn facilitate revival of the investment cycle,” Angel Broking said in a statement.

COMMENTARY

KILLOL PANDYA, SENIOR FUND MANAGER, LIC NOMURA MF ASSET MANAGEMENT, MUMBAI

“CPI may cause some amount of flutter only among some market participants. I think RBI will want to watch out for more data such as U.S. Federal Reserve meeting and ongoing parliamentary session.

“The government’s performance and how much legislation goes through in the budget session is on watch, as much of RBI’s calculations are based on government’s performance on legislation.”

SIDDHARTH SANYAL, INDIA ECONOMIST, BARCLAYS, MUMBAI

“The CPI is more or less on expected lines.

“This reinforces projections that inflation will remain low and we expect the RBI to cut rates by 25 basis points by June and pause after that.

The IIP (industrial output) number was a minor surprise. But still a 2.6 percent industrial growth does not mean a significant improvement in the economy and does not shift the needle in any way.”

RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL SERVICES, MUMBAI

“(On CPI) It is neither a negative nor a positive surprise. It is in line with expectations.”

“They (RBI) have already reduced it (repo rate) twice this year so far and I feel they will frontload the reductions.

“Another 25 basis points (cut) may happen in April but after that they will go for a pause because many uncertainties will crop up

“We may not see material change in the economic scenario before the festive season but monsoon will be a very crucial event to watch. Also the steep hikes in excise duty and service tax rates are going to be inflationary.

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

“CPI is broadly in line with expectations. Food inflation seems to be bit higher than what we anticipated. But that does not change the trajectory of overall inflation going ahead and we think the RBI’s goal of 6 percent by January will be achieved.

“We still expect RBI to cut the repo rate by 25 basis points by June before pausing. It is better not to come to conclusion on IIP (industrial output) data as this data will undergo a change in a few months.”

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