Indian inflation could fall below 4%.

Consumer inflation in India in February is likely to fall below the Reserve Bank of India's (RBI) medium-term target of 4% for the first time in six months.

Consumer inflation in India is likely to decrease in February due to lower food prices. (Illustrative image)

Consumer inflation in India in February 2025 is likely to fall below the Reserve Bank of India's (RBI) medium-term target of 4% for the first time in six months, thanks to cooling food prices, according to a Reuters poll. This bolsters expectations of interest rate cuts.

Over the past few months, with abundant supplies of winter vegetables, food prices, which account for nearly half of the inflation basket, have slowed significantly. This is a positive sign after last year's supply disruptions, when erratic monsoon winds and intense heat caused food prices to skyrocket, with many items increasing by double digits.

A Reuters poll of 45 economists , conducted from March 4 to 10, forecast inflation to fall to 3.98% in February, compared with 4.31% in January.

Forecasts for the data to be released on March 12th range from 3.40% to 4.65%, with nearly 70% of respondents predicting inflation will be at or below the RBI's medium-term target. Only 5 predicted inflation would exceed January's level.

With inflation within the RBI's target range of 2-6%, economists believe the central bank may continue to cut interest rates in April to support slowing economic growth, after already reducing them by 0.25 percentage points in February.

Another Reuters poll suggests this interest rate cut cycle will be short and not too deep.

However, the Indian Meteorological Department warns that summer and heatwaves could arrive early, raising concerns that inflation could rise again as winter food supplies dwindle.

“We anticipate vegetable prices will start rising again from March due to the impact of heatwaves and weather disruptions to crops,” said Rahul Bajoria, India & ASEAN economist at Bank of America.

His team forecasts overall consumer inflation to reach 4.8% in the current fiscal year but fall to 4.1% in the next fiscal year, with risk factors balancing between lower commodity prices and a weaker Rupee.

This forecast is consistent with the results of a Reuters poll last month, which projected inflation at 4.8% and 4.3%, respectively.

Core inflation, excluding fluctuations in food and energy prices, is projected to rise slightly to 3.82% in February from 3.70% in January.

Inflation based on the wholesale price index is forecast to rise to 2.36% in February, up from 2.31% in January, according to a Reuters survey.

Source: https://congthuong.vn/lam-phat-an-do-co-the-duoi-muc-4-377736.html