(FE)
India’s consumer inflation likely declined sharply to a five-month low of 4.60% in January, down from 5.22% in December, as food price increases slowed, according to a Reuters poll of economists.
The drop in inflation offers relief to Indian households, which allocate a significant portion of their budgets to food. It is also welcomed by the Reserve Bank of India (RBI), which recently cut the repo rate by 25 basis points to 6.25%. The arrival of fresh winter produce in local markets has eased food price pressures, which account for nearly half of the Consumer Price Index (CPI) basket. Economists noted that declining vegetable prices played a key role in bringing down inflation.
According to a Reuters survey conducted from February 4-10 among 56 economists, CPI-based inflation fell to 4.60% in January. Forecasts for the official data, set to be released on February 12 at 1030 GMT, ranged between 4.20% and 5.10%.
“Except for wheat and vegetable oil, most food categories are showing signs of moderation. The usual seasonal softness in food prices during winter is also supported by a strong kharif harvest,” said Sakshi Gupta, principal economist at HDFC Bank.
