India’s consumer price inflation (CPI) remained unchanged at 5.09 per cent in February 2024, compared to 5.1 per cent in January, as food inflation surged higher and inflation across all other sub-groups eased in Feb 2024, indicating that the momentum in the non-food items continued to track a welcome moderation, as per Government data on Tuesday.
“Pricey food led to sticky headline inflation,” observes Dharmakirti Joshi, Chief Economist, CRISIL.
Data shows food and beverages inflation printed above the 7 per cent mark for the fourth month in a row with an unpleasant uptick in Feb 2024 vis-à-vis Jan 2024. The pressure from vegetables remained broad-based with inflation in tomato, onion, and potato darting up to 22.7 per cent from 18.1 per cent in January, while the non-TOP category inflation rose to 34 per cent from 32.2 per cent.
Joshi notes that while the Kharif harvest has been helping in the softening of foodgrain inflation, vegetables yet again are playing spoilsport.
The CPI inflation for Jan’24 eased to 5.1 per cent, mainly driven by the fall in prices of cereals and housing. For 2024, prices of eggs, meat, fish and vegetables categories witnessed a sharp rise in their inflation prints, pushing up the food and beverages inflation. This, says Aditi Nayar, Chief Economist, ICRA, was not spread out with seven of the 12 sub-items witnessing a moderation in their YoY inflation print.
Inflation in the miscellaneous group cooled off to a 51-month low of 3.6 per cent in Feb 2024, amid a broad-based dip across all the six sub-categories, while that for housing and clothing and footwear also eased to multi-month lows in that month, helping to moderate the core-CPI inflation.
The softer core inflation and even non-food inflation at 2.9 per cent remain a relief. “This, along with the government’s pursuit of fiscal consolidation, should comfort the Monetary Policy Committee (MPC) of the Reserve Bank of India and create grounds for rate cuts in the months to come,” says Joshi
At present, ICRA estimates the headline CPI inflation to dip to sub-5.0 per cent in March 2024 from 5.1 per cent in February 2024, led by a dip in the fuel and light (amid the cut in LPG prices) as well as the food inflation prints, even though the latter is likely to remain elevated above the 7.0 per cent mark.