March 13 (Reuters) - India's annual retail inflation rate eased to 6.44% in February from 6.52% in January, government data showed on Monday.
However, the CPI (consumer price index) data was above the Reserve Bank of India's (RBI) upper targeted limit of 6% and higher than economists' average estimate of 6.35% estimate, according to a Reuters poll.
COMMENTARY:
SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
"February CPI inflation at 6.44%, while elevated, is broadly in line with expectations. Cereals and milk inflation continue to be high, while fruit prices spiked up too in February. However, we see food inflation softening in March based on recent price trends.
"Core inflation at 6.1% remains elevated and sticky with relatively high inflation across clothing and footwear, health, personal care and effects, and household goods/services. The RBI will remain hawkish in the April policy as inflation prints have spiked back over 6% in January-February along with core inflation remaining sticky above 6%.
"We continue to expect a 25 bps repo rate hike in the April policy."
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI
"February CPI came nearly in line with our estimates and was led mainly by higher-than-expected print on housing and sticky core inflation. Core inflation has remained above 6% for four consecutive months underlying still-prevailing pricing power in the services sector.
"The recent developments in the United States amid failure of the SVB (Silicon Valley Bank) and actions taken by the central bank thereafter have toned down expectations of an aggressive action despite elevated U.S. inflation.
"In this backdrop, we expect the MPC (Monetary Policy Committee) to hike repo rate by 25 bps in April policy and remain data-dependent thereafter."
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI
"CPI inflation at 6.44% in February is partly due to the statistical adjustment made for the food grains distributed through PDS. I think the MPC will take this into account before finalising the quantum of rate hike in April. The quarterly GDP data was not encouraging for private consumption and investment spending.
"Moreover, global risks are rising because of the contagion effect of the SVB failure. As of today, I expect the MPC to recommend a hike of 25 bps in the April policy and give a clear forward guidance on future actions.
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURGAON
While the correction in the prices of heavily weighted items in the CPI basket such as wheat, vegetables and edible oils augurs well for the food inflation print in the current month amidst a high base, there are concerns around the impact of a likely heat wave on the wheat crop and the consequent impact on wheat prices in the near term. This, along with the possibility of the occurrence of El Nino around the summer season and its impact on monsoons, would play an important role in determining the trajectory of food inflation over the next few quarters.
"Given two consecutive CPI inflation prints above 6%, the MPC may go in for another rate hike, although the decision is likely to be non unanimous based on the minutes of the last review. Moreover, global developments over the next three weeks could impact the MPC's decision.
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"The February CPI print came broadly in line with our expectations but higher than the MPC's upper threshold levels of 6% for two consecutive months.
"While the global financial instability has reduced the probability of a 50 basis points (bps) hike by the U.S. Federal Reserve and the Indian rupee has remained largely well behaved, we expect the higher-than-6% inflation to keep the MPC cautious and hike the repo rate by 25 bps in the upcoming April policy."
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
"Inflation came in higher than expected, led by higher food inflation — particularly cereals and milk inflation. The risk to inflation is tilted towards the upside with El-Nino conditions predicted in 2023. The still sticky core provides little leg room for absorbing any spikes in food inflation that might develop in the coming months.
"Rabi sowing has also been tepid compared to last year. Overall inflation prints could edge below 6% over the next quarter on account of base effects, but they are likely to jump back above 6% in the July-September quarter if the above risks materialise.
"This print strengthens the case for another 25 bps rate hike by the RBI in the next policy with an increasing possibility that further rate hikes post April cannot be ruled out now." (Reporting by Nandan Mandayam, Nallur Sethuraman, Siddhi Nayak and Nishit Navin in Bengaluru and Mumbai; Editing by Sohini Goswami)
