Slight decline in retail inflation rate
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Retail Inflation: According to official data released on Tuesday, despite the rise in the prices of food items, consumer price index (CPI) based inflation is almost equal to 5.1 percent in January. According to National Statistical Office (NSO) data, inflation in food items stood at 8.66 percent in February, which is marginally higher than 8.3 percent in the previous month.
On a monthly basis, there was a slight decline in the inflation of vegetables, fruits, oils and fats, pulses and their products. However, the rate of price increase remained high in cereals and its products, meat and fish and milk and its products segments. The share of food items in the consumer price index is about 50 percent.
According to NSO, the average inflation in February was higher in rural areas at 5.34 percent while in urban areas it was 4.78 percent. Among the states, the highest inflation was in Odisha at 7.55 percent while the lowest was in Delhi at 2.42 percent.
The Reserve Bank of India has the responsibility of keeping retail inflation at four percent with a variation of two percent. In its monetary policy review last month, the central bank had estimated inflation to be 5.4 percent in 2023-24 and 5.0 percent in the January-March quarter.
Regarding the CPI data, ICRA Chief Economist Aditi Nair said that inflation rate softened in February in all sub-groups except food grains and beverages. This indicates that softness in the non-food items category continues. He said, core inflation (removing food and beverages, fuel and light from CPI) moderated to 3.5 percent in February this year, which was 3.7 percent in January 2024. This is the lowest in metric-based data available since January 2015. NSO collected price data from 1,114 urban markets and 1,181 villages. This includes all states and union territories. The Monetary Policy Committee of RBI mainly considers retail inflation while deciding policy rates.
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