Retail Inflation in India Expected to Decline: Analysis
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New Delhi, Dec 10 (NationPress) India’s retail inflation, as per the Consumer Price Index (CPI), is predicted to decrease to 5.5 percent in November, driven by a fall in food prices, according to a report by Morgan Stanley.
"We anticipate a reduction in CPI inflation to 5.5 percent in November from 6.2 percent in October, supported by a decline in food prices, despite a slight increase in core inflation and a continued fall in fuel prices. On a month-to-month basis, we expect the index to drop, influenced by decreasing food prices and a slowdown in core CPI," the report states.
The core CPI encompasses various goods and services but excludes food and fuel, which are viewed as more unstable.
The CPI inflation surged to 6.21 percent in October, largely due to escalating food prices, particularly vegetables, during the month. This marked the first instance where inflation exceeded the Reserve Bank of India's upper threshold of 6 percent in recent times.
Retail inflation rose from 5.49 percent recorded in September as vegetable prices soared by 42.18 percent in October, a consequence of the late withdrawal of the monsoon this year, which harmed crops and curtailed supply.
RBI Governor Shaktikanta Das remarked last week, “India’s growth narrative remains solid. Inflation is trending downwards, but we must acknowledge the substantial risks ahead. These risks should not be underestimated.”
The RBI Governor expressed optimism about economic prospects, noting that “the equilibrium between inflation and growth is well positioned.”
On Friday, the Reserve Bank of India (RBI) reduced the cash reserve ratio (CRR) for banks by 0.5 percent to enhance the availability of funds for lending to stimulate economic growth, while maintaining the key policy repo rate at 6.5 percent with a focus on inflation.
The CRR reduction is expected to inject Rs 1.16 lakh crore into the banking framework and lower market interest rates.
