Retail inflation Rate in India dips to six.58% in February from 7.59% in January; manufacturing unit output grows by way of 2% in January | India Business News – Times of India
In terms of year-on-year basis, the inflation number stood at 2.57 per cent in February 2019.
The inflation number had jumped to a 68-month high of 7.59 per cent last month.
The fall in retail inflation was witnessed likely due to moderating food prices, but remained above the Reserve Bank of India’s (RBI’s) target of 4 per cent.
In it sixth bi-monthly monetary policy meet in February, the central bank kept repo rate unchanged at 5.15 per cent and reverse repo rate at 4.90 per cent for the second consecutive time.
It also revised upwards its retail inflation projection for the last quarter of the current fiscal to 6.5 per cent owing to likely increase in input costs for milk and pulses amid volatile crude oil prices and termed the overall outlook on price rise as “highly uncertain”.
Going forward, the inflation outlook is likely to be influenced by several factors like food inflation, crude prices and input costs for services, the RBI had said.
The MPC (Monetary Policy Committee) has been tasked by the government to tame retail inflation based on CPI at 4 per cent (+,- 2 per cent).
Despite lowering interest rates by a total of 135 basis points last year, economic growth was 4.7% in the October-December quarter — its slowest pace in over six years — and analysts expect a further deceleration in Asia’s third largest economy as the coronavirus hurts growth.
However, amid uncertainty about how the virus will spread the RBI said it would act accordingly and expressed its willingness to ease monetary policy further but above target inflation could make it difficult for the RBI to act.
Madan Sabnavis, chief economist at Care Ratings, tod news agency Reuters that the RBI could overlook overshooting inflation if the coronavirus hits the country’s economic health.
“If the virus spreads, the RBI will definitely intervene and go for a rather big cut in interest rates, improving the market sentiment,” he said.
In another set of data, Industrial output grew by 2% in January as against 1.6% rise in the year-ago month.