New Delhi (TIP)- Continuing moderation in food prices brought retail inflation to a 12-month low of 5.7% in December 2022 , data released by the National Statistical Office (NSO) showed. In another set of statistics released by NSO, industrial activity posted a sharp jump to 7.1% growth in the month of November. The latest Consumer Price Index (CPI) and Index of Industrial Production (IIP) numbers have positively surprised analysts. A Bloomberg forecast of economists had projected December inflation to be 7.9% while November IIP was expected to be just 2.8%. To be sure, experts are more sceptical about the prospects of a manufacturing revival than the downward trend in inflation, which makes the February Monetary Policy Committee (MPC) meeting of the RBI an important event in the economic calendar. Indeed, some economists are already recommending that the central bank suspend its rate tightening cycle in February.

“Against the evolving landscape, we see little incentive for further rate hike, with synchronised past actions on rate front yet to show the full impact. The next policy statement is due on Feb 6-8 and just comes after the Union budget on Feb 1 and also after the FOMC policy statement on Jan 31-1, first in 2023, giving impetus to data driven stance,” said Dr Soumya Kanti Ghosh, group chief economic adviser, State Bank of India. India’s benchmark inflation rate, as measured by CPI stood at 5.72% in December 2022. This is the lowest monthly inflation print since December 2021, the third consecutive month of a dip, and the second consecutive month when it has stayed below the 6% mark, the upper limit of RBI’s tolerance band. The data also shows that inflation for the quarter ending December is just 6.1%, which is lower than the 6.6% forecast by MPC in its December 2022 meeting. MPC had overestimated inflation in the immediate quarter in its June and September meeting as well.     Source: HT