New Delhi: Retail inflation picked up for the first time in seven months to 3.65% in February from 3.17% a month ago as food inflation reversed its downward trend, confirming the apprehension expressed by the central bank on the longevity of the softening of price increases.
The Reserve Bank of India (RBI) in its last policy statement in January surprised the markets by holding policy rates unchanged and shifting its stance from accommodative to neutral, blaming stubborn non-fuel, non-food inflation.
“...it is not change in the variable that we have been targeting by legislation. So it is not a change in stance at all. It is just a comment that CPI (consumer price index) excluding food and fuel has been difficult to bring down. Going forward, to work for bringing down inflation below 5% on a durable basis requires ex-food, fuel inflation also to come down,” RBI governor Urjit Patel said after the customary post-budget address by finance minister Arun Jaitley to the central board of the RBI last month.
Food price inflation picked up in February to 2.01% from 0.61% on the back of higher fruits and fuel prices.
In its policy statement, the RBI had said excluding food and fuel, inflation has been unyielding at 4.9% since September. “While some part of this inertial behaviour is attributable to the turnaround in international crude prices since October—which fed into prices of petrol and diesel embedded in transport and communication—a broad-based stickiness is discernible in inflation, particularly in housing, health, education, personal care and effects (excluding gold and silver) as well as miscellaneous goods and services consumed by households,” it said.
Data released earlier the day showed wholesale price inflation accelerated to an over three year high at 6.55% in February from 5.25% a month ago, due to rise in prices of rice, fruits and cooking gas.
A Bloomberg analysts’ poll had projected CPI at 3.6% and WPI at 6.1% for February.
Aditi Nayar, principal economist at rating agency ICRA Ltd said the continued seasonal uptrend in prices of perishables is likely to outweigh the persisting fall in prices of pulses, contributing to a further hardening of food inflation in March 2017. “However, the sharp correction in crude oil prices witnessed over the last week would douse minerals inflation in March 2017, restraining headline WPI inflation at around 6.0% in that month,” she added.
