February inflation picks up slightly, but April rate cut still seen

  • India's annual retail inflation picked up in Feb to 2.57%, after easing to a downwardly revised 19-month low of 1.97% in Jan
  • On 4 April, the RBI's MPC is widely expected to cut the benchmark repo rate for the second straight meeting

Manoj Kumar (with inputs from Reuters)
Updated12 Mar 2019
India's annual retail inflation picked up in February to 2.57%.
India’s annual retail inflation picked up in February to 2.57%.(Reuters)

India's consumer prices rose at a faster pace than anticipated in February, and remained below the Reserve Bank of India's target for a seventh straight month, lending weight to expectations that the bank could again cut the key interest rate in April.

India's annual retail inflation picked up in February to 2.57%, after easing to a downwardly revised 19-month low of 1.97% in January, government data showed on Tuesday.

Analysts polled by Reuters had forecast February's annual increase in the consumer price index at 2.43%.

February's marginal increase in inflation stemmed from higher costs of housing, health, education services and fuel. Health and education costs rose more than 8 percent in February from a year earlier, the data showed.

Economists say inflation remains subdued because of high unemployment and declines in rural incomes following a fall in food prices and in demand for exports.

The unemployment rate rose to 7.2% in February, the highest since September 2016, and up from 5.9% in February 2018, according to data compiled by the Centre for Monitoring Indian Economy.

Rupa Rege Nitsure, chief economist at L&T Finance Holding in Mumbai, said weak food inflation would keep rural demand subdued and would gradually bring down core inflation.

"This strengthens the case for another rate cut in April with a strong commentary on transmission," she said.

Figures released separately on Tuesday showed annual industrial output growth rose 1.7% in January compared with an upwardly revised 2.6% the previous month.

Economic growth slowed to a five-quarter low of 6.6% in October-December, and the government estimate for the financial year ending this month has been revised down to a five-year low of 7% from 7.2%.

On 4 April, the Reserve Bank of India's Monetary Policy Committee (MPC) is widely expected to cut the benchmark repo rate for the second straight meeting.

Its shock 25 basis point cut to 6.25% in February - at Governor Shaktikanta Das' inaugural meeting - was the first in 18 months.

Declining inflation had cleared the path for the MPC to cut again as a widening gap between inflation and borrowing costs was hurting companies' balance sheets as they are unable to pass on the interest costs to consumers amid low inflation, business leaders said.

Core consumer inflation, which strips out food and fuel prices, was estimated at 5.3-5.4 % in February, slightly higher than January's downwardly revised 5.2-5.3%, according to three analysts after seeing inflation figures released on Tuesday.

Retail food prices fell for the fifth straight month, by 0.66 percent in February from a year earlier, compared with a drop of 2.24 percent a month earlier. The figures show rural incomes remain under pressure while consumers benefit from easing inflation.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
HomeIndustryBankingFebruary inflation picks up slightly, but April rate cut still seen

Most Active Stocks

Bharat Electronics

305.85
03:55 AM | 20 JUN 2024
-3.45 (-1.12%)

Bandhan Bank

203.05
03:55 AM | 20 JUN 2024
4.2 (2.11%)

Indian Oil Corporation

167.20
03:55 AM | 20 JUN 2024
0.4 (0.24%)

Tata Steel

180.85
03:55 AM | 20 JUN 2024
0.8 (0.44%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Alok Industries

29.50
10:27 AM | 19 JUN 2024
2.15 (7.86%)

Jubilant Ingrevia

554.95
10:16 AM | 19 JUN 2024
39.85 (7.74%)

Triveni Engineering & Indus

413.75
10:29 AM | 19 JUN 2024
28.85 (7.5%)

Shree Renuka Sugars

51.22
10:29 AM | 19 JUN 2024
3.47 (7.27%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    72,995.00-286.00
    Chennai
    73,353.00642.00
    Delhi
    73,210.00-285.00
    Kolkata
    72,995.00-571.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    103.94/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsloanPremiumGet App