India,New Delhi, February – The annual retail inflation in India for the month of February has risen at a faster than expected pace, driven by higher food prices. This is significant as food prices make up a significant portion of India’s consumer price index (CPI) basket and often experience sharp swings, leading to fluctuations in overall inflation rates. The government has mandated the Reserve Bank of India to maintain retail inflation at 4 percent, with a margin of 2 percent.

Economists’ Projections and CPI

According to the latest forecasts by the Reserve Bank of India (RBI), the headline retail inflation is expected to average around 5.0 percent in the first quarter of 2024. Economists polled by Mint had projected a range of 4.90% to 5.50% for inflation, with only three of them expecting an increase from the previous period. This rise in inflation in February can be attributed to the higher food prices, which led to an increase in the overall consumer price index (CPI).

February Retail Inflation Figures

Government data released on Tuesday showed that India’s annual retail inflation for February stood at 5.09%, a slight decrease from the previous month’s rate of 5.10%. However, food inflation, as estimated by the Centre for Monitoring Indian Economy (CMIE), likely eased from 8.3% in January to 7.9% in February. This suggests that while overall inflation has eased slightly, food prices still remain a driving factor for inflation in the country.

Impact on Industrial Production

While the CPI measures the cost of living for consumers, the Index of Industrial Production (IIP) measures the output of industrial sectors. The statistics ministry is set to release the IIP for January at the same time as the CPI inflation figures for February. This will provide a comprehensive view of the overall economic situation in India, as inflation and industrial production are closely linked.

India’s annual retail inflation for February rises at a faster than expected pace.

The headline retail inflation is projected to average 5.0 percent in the first quarter of 2024.

Food prices, which make up a significant portion of the consumer price index (CPI) basket, are driving the rise in inflation.

Annual retail inflation for February eases slightly to 5.09% from 5.10% in the previous month.

Food inflation likely eases to 7.9% in February from 8.3% in January.

The Reserve Bank of India has been tasked with maintaining retail inflation at 4 percent with a margin of 2 percent.

Industrial production figures for January will be released simultaneously with the CPI inflation data for February.

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“The annual retail inflation in India has risen at a faster pace than expected, primarily due to higher food prices. While overall inflation has slightly eased, food prices continue to play a significant role in driving inflation rates. The Reserve Bank of India’s mandate to maintain retail inflation at 4 percent highlights the importance of keeping inflation in check. The upcoming release of industrial production figures will provide a comprehensive view of India’s overall economic situation.”