Retail inflation rises to 6.07% in February 2022

15 Mar 2022 , 07:38 AM

According to the data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed Monday, India’s annual retail inflation rose to an 8-month high of 6.07% in February 2022 on higher food prices.

The retail inflation, which is measured by the Consumer Price Index (CPI) in January 2022 stood at 6.01%, as per the statistics ministry showed on Monday.

Aditi Nayar, Chief Economist, ICRA said ““Led by food and beverages, clothing and footwear, and housing, the CPI inflation inched up to an eight month high 6.1% in February 2022, similar to our forecast (6.2%), and discomfitingly above the upper threshold of the MPC’s 2-6% medium-term target range.”

“Food and beverages inflation rose to a 15-month high in Feb 2022 despite a sequential moderation in food prices driven by egg, vegetables, pulses and sugar. While healthy reservoir levels and a rise in rabi production of several crops are enthusing, the rising prices of edible oils are likely to pose a challenge going ahead.”

“Large month-on-month increases in clothing and footwear, personal care and effects, and recreation and amusement point to some pass through of higher input costs amidst the abatement of the third wave of Covid-19,” ICRA added.

The transmission of higher commodity prices to the WPI inflation will be relatively rapid.  However, in an uncertain demand scenario, output prices that reflect in the CPI basket may adjust relatively slowly. Moreover, an eventual cut in excise duty could absorb a portion of the impact of higher crude on the retail selling prices of petrol and diesel and therefore on the CPI inflation. Nevertheless, higher edible oil prices will exert pressure on the food inflation in March 2022.

“With no change telegraphed so far, and the uncertainty stemming from the impact of the Russia-Ukraine conflict, we expect another status quo policy in April 2022, despite the Feb 2022 CPI inflation print exceeding 6%. However, anchoring of inflationary expectations may warrant a less dovish tone of the policy document,” Aditi Nayar added.