India’s Retail Inflation At Five-Month High In March
Economists surveyed by Bloomberg had expected inflation to rise 3.94 percent.
India’s retail inflation in March rose to its highest level in five months, largely in line with what economists expected, as the impact of demonetisation on the economy waned.
The consumer price index rose 3.8 percent year-on-year in March, data released by the government showed. Economists surveyed by Bloomberg had expected retail inflation to rise 3.94 percent.
Food prices in March increased 1.93 percent from the same month last year. Inflation will largely depend on how food prices evolve, the Reserve Bank of India had said in its bi-monthly policy review last week.
The fall in inflation between October and February – it was at its lowest level ever in January – was mainly due to the deflation in prices of vegetables and pulses, the RBI had noted with an uncertain outlook for inflation in the near term.
Vegetable prices continued to decline, falling 7.2 percent over the last year. The prices of pulses too fell 12.4 percent.
India’s policy rates will see a long pause if the inflation moves ahead on the same trajectory as RBI expects, said Sunil Sinha of India Ratings and Research.
The data with respect to retail inflation is on expected lines and confirms the RBI’s concern on this account. Given the way inflation has panned out in recent few months and if it follows the trajectory RBI has sketched in its first bi-monthly monetary policy statement of FY18 then we are in for a long pause on policy rates and in case monsoon behaves abnormally then even a reversal in rate cycle.Sunil Sinha, Chief Economist, India Ratings and Research
Here are the other key movers of the inflation index:
- Food and beverage prices rose 2.54 percent year-on-year.
- Cost of pan, tobbacco and intoxicants climbed 6.2 percent.
- Clothing and footwear prices increased 4.6 percent.
- Fuel and lighting costs jumped 5.5 percent year-on-year.