The Hindu (Mumbai)

Inflation slowed, yet no relief on food bills

- Vikas Dhoot

India’s retail inflation moderated to a 10month low of 4.85% in March from 5.1% in February but food inflation remained sticky at 8.52%, little changed from the 8.66% recorded in the previous month as price rise accelerate­d in cereals and meat, while vegetables, pulses, spices and eggs remained in doubledigi­t inflation.

While inflation for urban consumers cooled significan­tly from 4.8% in February to 4.14% in March, rural consumers had it harder as they experience­d a slightly higher inflation of 5.45% in March compared with 5.34% in the previous month.

This trend was visible in the extent of food price rise as well, as it accelerate­d from 8.3% in February to 8.6% in March for rural India, while the food inflation for urban consumers dropped from 9.2% in February to 8.35% last month.

On a monthonmon­th basis, there was no change in the Consumer Price Index but the food price index inched up about 0.2% and economists reckoned that the ongoing heatwave could spike food inflation in coming months. Even as crude oil prices are firming up and an inflation spike in the U.S. may delay hopes of interest rate cuts from the Federal Reserve, sticky food inflation at home could further dampen prospects of rate cuts from India’s central bank.

While March’s inflation rate is still aloof from the bank’s stated 4% target, average retail price rise in the last quarter of 202324 has been 5.01%, in line with the 5% average projected by the Reserve Bank of India (RBI).

The RBI, which last week called inflation the elephant in the room that needs to return to the forest for good, expects retail inflation to ease to an average 4.5% this year from the 5.4% clocked in 202324.

The ongoing April to June quarter is, however, expected to see an average inflation of 4.9%, as per the RBI. Vegetables’ inflationW­ithin the food basket, vegetables inflation cooled marginally from the sevenmonth high of 30.25% in February to 28.3% last month. A similar easing was recorded in pulses (up 17.7% in March from 18.5% in February), eggs (up 10.33% from 10.7%), and sugar (up 7.25% compared with 7.5% in February).

However, the price rise in cereals spiked to 8.4% in March from 7.6% in the previous month, and rose to 6.4% for meat and fish, from 5.2% a month earlier. Spices inflation remained over double digits at 11.4%, moderating from 13.5% in February. “Food prices continue to be under pressure with cereals, vegetables, spices and pulses seeing high inflation and the present heatwave poses an upside risk,” said Bank of Baroda chief economist Madan Sabnavis.

Although inflation in household goods and services, and health and education, eased slightly from February levels, personal care and effects prices surged at a faster pace of over 6% in March.

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