Retail inflation based on Consumer Price Index (CPI) is expected to have come down below 5 per cent in March. Official announcement about the headline number and retail food inflation will be made public at 5.30 pm on Friday.

Inflation rate was 5.1 per cent in February. Now, if it comes below 5 per cent but above 4.9 per cent, it will be five months low. However, this is unlikely to prepone policy rate cut as headline number is still above median rate of targeted inflation range (2-6 per cent). Also, there is no persistent sign of moderation in food and global crude prices. At the same time, election coupled with projection of heat waves also likely to impact overall inflation trend.

RBI Governor Shaktikanta Das said last week that food price volatility remains a concern. Food price rises have outpaced headline inflation for several months, affecting millions of poor households already heavily dependent on government food subsidies.

At present, “ICRA estimates the headline CPI inflation to dip to sub-5 per cent in March, 2024 from 5.1 per cent in February, led by a dip in the fuel and light (amid the cut in LPG prices) as well as the food inflation prints, even though the latter is likely to remain elevated above the 7 per cent mark,” Aditi Nayar, Chief Economist with ICRA said.

The upward revision in the NSO’s GDP growth estimates for Q1-Q2 FY2024, along with the three successive quarters of 8 per cent plus GDP expansion and the CPI print of 5.1 per cent for February, 2024, suggest the status quo on the rates and stance in April, 2024. Unless “growth posits a negative surprise in the intervening months, we now see a dimmer possibility of the stance being changed in the June or August 2024 MPC reviews,” Nayar added.

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