India’s retail inflation remained above the central bank’s 6% tolerance threshold for the second successive month in February at 6.44%, virtually unchanged from 6.52% in January, as per the National Statistical Office.
Price rise faced by urban consumers inched up marginally from 6% in January to 6.1% in February, while it eased fractionally for rural consumers from 6.85% to 6.72% in February.
Food inflation remained sticky, with the Consumer Food Price Index rising 5.95% in February, just a tad lower than the 6% recorded in January.
Vegetables remained in deflationary territory for the third successive month, with prices falling 11.6% from last year’s levels this February, compared to a 11.7% fall in January.
But many other food items continued to witness spiralling prices. Cereals inflation surged from 16.1% in January to 16.73%, milk products accelerated from 8.8% to 9.65% in February, and spices inflation remained over 20% for the third month in a row.
Inflation in fruits more than doubled from 2.9% in January to 6.4% in February, while prepared meals, snacks and sweets’ price rise sped from 7.8% to 8% in February.
Inflation in eggs eased from 8.8% in January to 4.3%, while the pace of price rise in meat and fish also moderated from over 6% to 3.4%. Oils and fats prices fell 0.5% last month from February 2022 levels, compared to a 1.41% rise in January.
There was no significant shift in the price rise trajectory of other items of household consumption, with fuel and light, clothing and footwear, personal care and effects seeing inflation persist in the range of 9% to 10%. For miscellaneous goods, household goods and services, health and education costs as well, the inflation trends were little changed, staying sticky in the range of 6% to 7.5%.
Among the major States, those with the highest inflation rates remained unchanged from January. Telangana continued to record the highest inflation at 8.56%, followed by Andhra Pradesh (8.01%), Madhya Pradesh (7.65%), Uttar Pradesh (7.12%) and Haryana (6.97%) in February.
As many as ten of 22 States for which data was released on Monday reported higher inflation than the national average of 6.44%, including Tamil Nadu (6.86%), Rajasthan (6.78%) and Maharashtra (6.72%).
“February’s inflation print is stubbornly close to January’s data and we expect March inflation to stay above 6% too, so there is a strong case for expecting the Reserve Bank of India to increase the repo rate in its April monetary policy review by 25 basis points,” said Madan Sabnavis, chief economist at Bank of Baroda. One basis point equals 0.01%.
Food inflation worries will persist owing to the prevailing heat wave’s shadow on wheat crop prospects, while milk inflation has climbed to 9.7%, he pointed out. “Milk prices have been raised often this year – at least three of those times to adjust for higher fodder costs. These prices will never come down,” Mr. Sabnavis cautioned.
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