Overall, there appears to be a slowdown in inflation across all the sectors except the ‘clothing, bedding and footwear’ industry
The downward trend in retail inflation commenced in December 2013 continues for the month of February 2014 as well, taming down the inflation concerns which loomed large over the economy during this fiscal. According to the data released, retail inflation, as measured by the Consumer Price Index (CPI), stands at 8.1% for February 2014 on a year-on-year basis edging lower than the 8.79% it recorded in January 2014. This is the third consecutive month of the downward trend in CPI inflation, which comes as good news following the upward trajectory inflation maintained in the first half of FY14.
The table below shows the movement of retail of inflation over the last three months:
Overall, there appears to be a slowdown in inflation across all the sectors except the ‘clothing, bedding and footwear’ industry, points out CARE Research.
According to CARE Research the continuous rate hikes by the RBI (Reserve Bank of India) and its resolve in taming down inflation finally seems to be reflecting in the retail inflation. Further, the expectation of a lower WPI (Wholesale Price Index) inflation for February is reiterated given the fall in CPI. Although inflation is on the desired path now, it is expected that RBI will maintain interest rates in the policy announcement in April 2014 to ensure that the decline in inflation continues before the monetary policy looks to promote growth.
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