Consumer price index (CPI) or retail inflation is likely to undershoot the Reserve Bank’s target in the January-March 2025 quarter, opening more policy space for easing the policy rate, Bank of Baroda said.
India‘s retail inflation significantly improved in February 2025, as the year-on-year Consumer Price Index (CPI) inflation rate stood at 3.61 percent, a decline of 65 basis points from the previous month.
The retail inflation print fell below 4 per cent in February for the first time in six months, mainly due to a decline in vegetable prices.
“We do not see major risks lurking for food inflation. However, one needs to be vigilant on account of hotter than expected summer, stickier international edible oil prices and risks from global inflationary policies,” said Dipanwita Mazumdar, an economist at Bank of Baroda.
As of now, the tide is in favour of a lower headline print emanating from a better Rabi harvest, better supply management strategies of the government, rangebound commodity prices, benign energy price outlook and lesser dependence of the CPI basket in terms of imported commodities.