According to an SBI Research research, retail inflation in India would stay over 5% till May

NEW DELHI: According to SBI Research, retail inflation in India, as measured by the Consumer Price Index (CPI), is predicted to stay marginally over 5% through May before falling to 3% in July. From November until the conclusion of the fiscal year 2024–2025, the retail inflation print is predicted to remain below 5%.
February’s retail inflation rate in India decreased slightly from 5.10 percent to 5.09 percent in January as a result of declining prices across all categories, with the exception of food.

When comparing January and February, the inflation of food goods (beef and eggs) surged dramatically (by 400–500 basis points).
The monthly rise in vegetable prices was 300 basis points, or 30.2%. Core CPI fell to 3.37%, which is a 52-month low and was last seen in October of last year.
In December, retail inflation reached a four-month high of 5.69 percent.
While retail inflation in India is over the desired 4 percent scenario, it is still within the RBI’s comfortable range of 2 to 6 percent.
With the exception of the recent pauses, the RBI has increased the repo rate to 6.5% from May 2022 by a total of 250 basis points since May 2022 in an effort to combat inflation. One tool of monetary policy that usually serves to reduce demand in the economy and lower the inflation rate is raising interest rates.
The RBI set India’s retail inflation predictions for 2024–25 at 4.5 percent during their most recent monetary policy meeting. Risks were balanced, with Q1 at 5.0 percent, Q2 at 4.0 percent, Q3 at 4.6 percent, and Q4 at 4.7 percent.
According to a geographical heatmap provided by SBI Research, Uttar Pradesh and Maharashtra contributed the most weighted amounts to the current retail inflation estimate.
“Food price trends are presently driving inflation with modest gasoline costs. Domestic inflation will be determined by future changes in food costs, according to SBI Research’s Ecowrap research.
The Department of Consumer Affairs should provide a comprehensive list of vegetable pricing in addition to TOP (tomato, onion, and potato), according to the study.
“This will make it easier to fathom the direction of the impact of vegetable prices on CPI (retail inflation),” it said.
According to the Ecowrap analysis, prices of other vegetables in the basket besides TOP have been the main factor influencing vegetable costs in the CPI in recent months.
All the scenarios point to the present repo rate of 6.5% as the optimal level. Only in Q2 FY25 can we anticipate the first rate decrease,” it said.