India’s retail inflation rose more touches in February to 6.07 per cent from a year ago, up from 6.01 per cent in January, two months above the top end of the Reserve Bank of India’s target bank for the second month in a row, government data released. he showed up on Monday.
Retail inflation based on the Consumer Price Index (CPI) was 5.03 percent in February 2021.
According to data released by the National Statistics Office (NSO), the rate of increase in food basket prices was 5.89% in February, compared to 5.43 in January.
The RBI mainly considers CPI-based inflation as it reaches its two-month monetary policy. Inflation was higher before the rising prices of crude oil in the war between Russia and Ukraine.
Crude oil prices have risen to record highs for decades due to supply sanctions on Russia, including a embargo on oil imports from Moscow, the invasion of Ukraine, the largest attack on a European state since World War II.
“Inflation was up 6.07 percent in February, slightly higher than we expected. Although this figure does not reflect a rise in commodity prices as a result of the Russia-Ukraine crisis, we expect inflation to rise by more than 6 percent in March,” he said. Sakshi Gupta, Chief Economist, HDFC BANK.
Fears of runaway inflation and the US Federal Reserve raising interest rates this week, as price pressures rise there rapidly in 40 years, could put pressure on India’s central bank, which is gearing up for growth. But analysts predicted that the RBI would continue to look at inflation and support the newborn recovery.
“The CPI inflation reading was just below the RBI’s upper threshold. because it continues, ”said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.
However, higher inflation and the Fed’s tag team will exacerbate the RBI’s dilemma.
“This is not a key factor at stake, as there is a 0.24 percent sequential expansion in the CPI compared to last month’s contraction. more than a dollar, ”said Suman Chowdhury, chief analyst at Acuité Ratings & Research.
A survey of Reuters economists predicted that annual inflation would hit 5.93%, a shadow below the RBI’s 2-6-6% target above the upper limit.
Government data released earlier on Monday showed that wholesale price-based inflation (WPI) accelerated to 13.11 per cent in February than a year ago, compared to 12.96 per cent the previous month.
This was largely due to the rise in fuel prices, which rose by 31.50 per cent year-on-year, compared with 32.27 per cent in January.
WPI inflation has remained double-digit for the eleventh consecutive month, beginning in April last year.
“It is clear that the data reinforce the presence of inflationary pressures in the manufacturing and services sectors,” he added. Mr. Chowdhury of Acuité Ratings & Research, referring to WPI data.