Inflation stays flat at 5.09% in February against 5.1% in January

India's CPI inflation remained stable at 5.1% in February, and food inflation rose slightly but was offset by a slowdown in core and fuel inflation.

India's benchmark inflation figure, as measured by the Consumer Price Index, remained flat between January and February. The headline inflation figure in the retail sector was 5.09% in February, compared to a reading of 5.1% in January 2024. The CPI for January and February, if read with the recent cut of Rs 100 in LPG cylinder prices, will be seen in the March inflation figures - meaning the CPI will be close to the Reserve Bank of India's forecast of 5% for the quarter ending March 2024. The figure February inflation rate is also in line with analysts' expectations. A Bloomberg survey of economists expected this figure to reach 5.05%.

While the overall CPI number is still above the Reserve Bank of India's 4% target, core inflation, which measures the non-food and non-fuel portion of the CPI basket, fell to 3.37%, according to the database of the Center for Monitoring Indian Economy. (CMIE). This is the lowest level of core inflation since November 2019 and indicates that the Indian economy is far from overheating at this point.

To be sure, food inflation rose marginally from 8.3% in January to 8.6% in February. This largely reflects the sharp rise in prices for eggs, fish and meat, as this category saw inflation rise from 1.6% in January to 5.7% in February. To be sure, food inflation rose marginally from 8.3% in January to 8.7% in February. This largely reflects the sharp rise in prices for eggs, fish and meat, as this category saw inflation rise from 1.6% in January to 5.7% in February. The inflation rate for vegetables also rose from 27.1% in January to 30.3% in February

While inflation for cereals and pulses fell marginally from January levels, future inflation expectations for these items will depend on the winter harvest. There are unofficial reports that western disturbances that brought rain in parts of northern and northwestern India may have damaged some crops.

In another series of indicators published by the National Statistics Office, the industrial production index for January fell slightly below analysts' expectations. At 3.8%, international investment growth in January was 30 basis points (a basis point is one-hundredth of a percentage point) below Bloomberg's forecast and also below the 4.25% for December 2023. More than three-quarters of the international investment basket grew, 3.2% in January, compared to 4.5% in December 2023. While the latest IVI figures are in line with expectations that growth will lose some momentum in the quarter ending March, caution is needed. Read it as a sign of a significant slowdown in economic momentum in the manufacturing sector. The Manufacturing PMI, another high-frequency indicator widely used by analysts, shows that the manufacturing sector actually gained economic momentum in January and February compared to December 2023 levels and remained in expansion territory.

"CPI inflation remained stable at 5.1% in February. Food inflation rose moderately but was offset by a sustained slowdown in core and fuel inflation. "Food price inflation increased moderately, but was offset by a sustained slowdown in core and fuel inflation. "said Rahul Bajoria, Managing Director and Head of Emerging Markets Economics, Asia (ex-China). "We expect the RBI to begin policy easing from 3Q 24, as it awaits further signs from food prices, drawing comfort from benign core inflation and robust growth."

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