The report states that core inflation is expected to remain low at 3.8 per cent year-on-year (YoY)
India’s consumer price index (CPI)-based inflation or retail inflation is likely to remain low, printing four per cent on year-on-year (YoY) basis in February as food prices expected to decline incrementally, according to a report by BofA Securities.
The lowest print in almost six months is largely due to a reduction in the prices of vegetable and meat as well dairy and rice. As food prices continue to moderate, the report noted that food and core inflation will continue to see a large gap but the distance is expected to shrink.
As far as the core inflation is concerned, the media reports added that it is expected to remain low at 3.8 per cent YoY, staying below four per cent for 15 consecutive months. For the current fiscal (FY25), BofA Securities has projected the headline CPI inflation at 4.8 per cent. It has forecasted it to ease to 4.1 per cent in the next financial year.
India’s retail inflation eased 91 basis points to 4.31 per cent in January 2025 from 5.22 per cent in December 2024. The CPI inflation print in January was the lowest YoY inflation after August 2024, as per the report.
The report highlighted a scope of further large declines in vegetable prices diminishing going ahead. For February, the vegetable prices are expected to register a dip and the big decline amongst the staples has been seen in pulses, as per the report. On the other hand, dairy, sugar and edible oils are moving slightly higher.
Given marginally higher gold prices and some pick up in core services, the core CPI, which excluded food and energy and other volatile items, is likely to remain rangebound at 3.83 per cent YoY, as per the report. However, the report stated that the core CPI is expected to go above four per cent in the next three months, but weak consumption will keep a leash on underlying price pressures.
