NEW DELHI • India’s inflation rebounded in February, but was still benign enough to support calls for the central bank to lower interest rates at next month’s monetary policy meeting.
Consumer prices rose 2.57% last month from a year earlier, the Statistics Ministry said in a statement yesterday. That compares to the 2.4% median estimate in a Bloomberg survey of 34 economists.
Inflation has slowed sharply since last year because of a fall in food prices, and remains well below the Reserve Bank of India’s (RBI) 4% medium-term target. The central bank is forecasting inflation of 2.8% in the January-March quarter.
This is the last inflation print before the April 4 interest-rate decision and ahead of general elections that kick off next month. Calls are growing for the RBI to lower interest rates again after it surprised with a 25 basis-point reduction in February.
Ria Modh, an analyst with Stci Primary Dealer Ltd in Mumbai, said calls for a rate cut in April will still be strong because of a revision in January inflation number to 1.97%, which is way below RBI’s target range. “If they need an investment demand, RBI needs to create an atmosphere where investment is boosted.”
Consumer food prices fell 0.66%. Fuel and light prices rose 1.24%. Housing prices rose 5.10%. Clothing and footwear prices rose 2.73%.
India’s factory output rose 1.7% in January, slower than the 2.4% gain in the previous month, data released separately showed. — Bloomberg