Retail Inflation: India’s retail inflation may reach a 16-month high with 6.35 percent in March. This will be above the Reserve Bank’s (RBI) target for the third consecutive month. This estimate has been expressed in a Reuters poll. The main reason for the rise in inflation could be the continuous increase in the prices of food prices.
However, the full impact of the increase in global crude oil energy prices due to Russia’s attack on Ukraine is not expected to be visible until April, as petrol and diesel prices in India were delayed.
Poll among 48 economists
A Reuters poll of 48 economists, conducted between April 4-8, indicated that the Consumer Price Index (CPI) or retail inflation is projected to rise 6.35 per cent in March on a year-on-year basis, compared to 6.07 per cent in February. This level of inflation will be the highest since November 2020.
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The CPI data, which continues till the afternoon of April 12, is expected to range between 6.06 per cent and 6.50 per cent. Overall, retail inflation is expected to be higher than the RBI’s upper target of 6 per cent.
Food items are getting expensive since February
“We expect retail inflation to be 6.30 per cent year-on-year as prices of food items continue to rise after three months of decline till February,” said Dheeraj Nim, economist at ANZ. He also cited changes in prices based on seasonal patterns in food prices.
Food prices, which account for about half of inflation, are projected to rise as supply chains have been disrupted by the Russo-Ukraine War. Production of food grains, supply of edible oil and export of fertilizers have been disrupted. Its effect can be seen on food items.
Palm oil became 50 percent costlier
The price of palm oil, the world’s most widely used oil, has risen nearly 50 per cent this year.
Samiran Chakraborty, Chief Economist for India at Citi, said the rise in global commodity as well as edible oils prices will push up inflation figures in March. “Even though the hike in petrol prices started late in the run-up to the state elections, it has become costlier by Rs 6.5 per liter in the last 10 days of March,” Chakraborty said.