MUMBAI, Feb 13 (Reuters) - India’s annual consumer price inflation eased to 3.17 percent in January, its lowest level in at least five years, helped by a sharp cooling in food prices, government data showed on Monday.
Economists polled by Reuters expected last month’s annual retail inflation to come in at 3.22 percent, compared with 3.41 percent in December.
Food inflation was 0.53 percent last month, lower than a revised 1.37 percent in December.
India began measuring consumer inflation at the start of 2012.
Core CPI is 5.10 percent, which is of course on the higher side. So, that justifies the argument that RBI has been making that core inflation is sticky. Therefore, there is no scope for rate cuts.
Inflation in the coming months is expected to be much below RBI’s trajectory. Until the first half of FY18, I‘m expecting all-in-all inflation to be at least a percent and more below RBI’s trajectory.
SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
I don’t think the central bank is going to cut rates anytime soon. They have already factored in inflation rates and they will apply a wait and watch policy to check core inflation trends.
I expect a core inflation rate of 4.9 percent
Going forward, key risks are commodity prices and food inflation over the next six months given the the monsoon patterns. (Reporting by Bengaluru and Mumbai newsrooms; Editing by Biju Dwarakanath)