Inflation Pressures Steady as She Goes in February

14 March, 2019, 16:39 | Author: Eric Barnett
  • Consumer Inflation Rises to 2.57% in February as Compared to 1.97% in January 2019

Retail inflation rose to a four-month high of 2.57 per cent in February but the prospects for a rate cut has brightened as the number is still below the RBI's inflation target of 4 per cent, while industrial growth declined to below 2 per cent in January. The Reserve Bank of India (RBI) factors in retail inflation while deciding at its monetary policy.

It said that rate of retail inflation, as represented by Consumer Price Index (CPI) for the month of February was 2.57, as against 1.97 per cent in January.

In January, inflation based on wholesale prices fell to a 10-month low of 2.76 per cent over the previous month on softening prices of fuel and some food items, according to Government data released in February.

US stock futures and Treasuries rose while the dollar fell, as the data suggest there's a greater chance that inflation won't hold up around the Fed's 2 percent objective - a development that would discourage policy makers from additional rate increases amid rising risks from weakening global growth.


The upward surge is likely to be welcomed by policymakers, who were alarmed by the 19-month low inflation rate of 1.97 per cent recorded last month. The rise in inflation is being driven by higher food prices.

Additionally, among the six use-based classification groups, the output of primary goods, which has the highest weightage of 34.04, rose by just 1.4 per cent.

Prescription-drug prices fell 1 per cent on a monthly basis, the most on record, bringing the annual decline to 1.2 per cent - the largest drop since 1972. That index tends to run slightly below the Labour Department's CPI, and January figures are due March 29. Customer inflation - decided by Consumer Price Index (CPI) - shows the rate of increase in consumer prices. The core CPI had increased by 2.2 per cent for three consecutive months on an annual basis. It hit the US central bank's 2 percent inflation target in March a year ago for the first time since April 2012. The central bank also changed its policy stance from "calibrated tightening" to "neutral". That followed a 1.1 per cent jump in January. The cost of communication services was unchanged in February for a third straight month.

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