MUMBAI (Reuters) - India’s annual consumer inflation eased slightly to 5.07 percent in January from a 17-month high of 5.21 percent in December, slightly lower than expectations, data from the Ministry of Statistics showed on Monday.
DEVENDRA KUMAR PANT, CHIEF ECONOMIST AND SENIOR DIRECTOR (PUBLIC FINANCE), INDIA RATINGS & RESEARCH, NEW DELHI
”Food inflation benefited from the decline in vegetable prices, which we generally see during winter.
”Going forward, the main factor will come into play somewhere around June when the government will announce MSP (minimum support prices for crops).
“We are still holding our view of 4.6 percent CPI inflation for the fiscal year 2018/19. However, the impact of MSP is yet to be factored in.”
RAGHVENDRA NATH, MANAGING DIRECTOR, LADDERUP WEALTH MANAGEMENT, MUMBAI
”I don’t think the RBI will change its views since it has already been contemplating an upward revision in inflation in the next half-year.
”Based on their stance, it is unlikely they are going to tinker with rates. Inflation may increase in the coming months due to oil price hike and food inflation not coming down. I do not expect a rate hike for the next five to six months.
“Apart from oil prices, monsoons will be the key factor for inflation. Food inflation has been the biggest culprit but if monsoon turns out well it could keep inflation to moderate levels.”
”Inflation numbers for January are modestly lower mainly due to moderating food (prices), while higher oil and rent allowance limited a larger correction in price pressures.
”Numbers are along RBI’s revised projections, with the next six months to stay firm on arithmetic terms i.e due to base effects.
”The central bank has already indicated that it will look through near-term prints and today’s numbers don’t warrant any change in their neutral policy stance.
“Volatility and base effects aside, IIP (industrial output) signals that growth has hit a trough and is on a gradual upmove.”
”Retail inflation is likely to hover around the 5 percent mark in the January-March quarter. Thereafter, CPI readings could touch 6 percent by the summer.
“Against such a backdrop, it is unlikely that the central bank would consider cutting rates. In fact, if the softening expected in 2H-FY19 does not materialise, the risk would be that of a rate hike somewhere down the line.”
Reporting by Tanvi Mehta and Arnab Paul in BENGALURU and Abhirup Roy in MUMBAI; Compiled by Rafael Nam