In a good news ahead of the upcoming RBI policy on April 1, annual rate of inflation, based on the consumer prices index (CPI) for month of February, 2014 eased more than expected to a 25-months low of 8.10%, as against 8.79% in January, aided by moderation in food prices.
According to the data, all India General (all groups) CPI numbers of February 2014 for Rural, Urban and Combined stood at 139.0, 135.3 and 137.4 respectively. The corresponding provisional inflation rates for rural and urban areas for February 2014 stood at 8.51% and 7.55%, While, inflation rates (final) for rural and urban areas for January 2014 stood at 9.35% and 8.09% respectively.
Additionally, core consumer price index was estimated to have risen around 7.9 per cent in February from a year earlier, easing from an 8.1 per cent advance in January. This is a positive since core inflation for the past few months has been stuck at around 8 per cent, a level Reserve Bank of India’s (RBI) chief Raghuram Rajan deems uncomfortably high.
However, retail inflation could pick momentum in coming months as recent trend of a decline in food prices could be temporary as hail and heavy rains in the past two weeks have damaged crops, which is likely to keep core retail inflation elevated. RBI so far has raised interest rates three times since September, even though economic growth is languishing at around a decade-low of 4.5 per cent.
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