Since January, while food prices have decreased, non -food inflation components have been drifting, but not enough to raise the general CPI | Photo credit: V Raju
After stubbornly soaking until the end of 2024, domestic inflation seems to be decreasing. The last launch of the consumer price index (ICC) showed retail inflation sliding 27 basic points sequentially 3.34 percent in March 2025. The largest taxpayer to the decrease was the food component that collapsed to 2.69 percent, a minimum of 40 months, from a peak of 10.87 percent in October 2024. Projection of India or 4.8 percent.
The prices of vegetables, which were the factor of wild card last year, have a hiring of legs like February, deflating in 7 percent in March. This was triggered by a rebound in horticultural production after a good monzón in fiscal year 2015 and improved the above (tomato-y-potato). With egg prices (minus 3.1 percent) and pulses (minus 2.7 percent) in mute or 1-3 percent inflation in dairy products and meat, pressure on low-income households that carried the worst of the spiral of food price last year. This can be positive for non -discretionary consumption. Edible oils (17 percent) continued to be the only atypical case between food in March 2025. The government can suffocate this, when towing the basic customs service of 20 percent on vegetable oil with last year.
Since January, although food prices have decreased, non -food inflation components have been drifting, but not enough to raise the general CPI. Housing inflation (3.03 percent), clothing (2.62 percent), health (4.26 percent) and transport saw smaller increases, but fuel inflation saw a 1.5 percent peak from 1.33 percent negative in February 2025. There are many punctuation points. One, although the prices of vegetables are prone to a seasonal summer peak, a high base effect will suffocate its impact on the CPI this year. With the early stage prognosis of the meteorological departments of India (IMD) that predicts a second consecutive year of monsoon rains prior to normal this year, the improvement in supplies should be maintained. Two, energy prices have a significant weight on the CPI and have a reduction effect between goods and services. Benchmark Brent Crude has fallen below $ 65 per barrel and is expected to remain moderate. He thought that until now the center has pocketed the savings of the decrease, it is possible to move to consumers.
Three, although the impact of Trump tariffs on inflation is difficult to measure at this juncture, trade interruption increases the perspectives of a global deceleration. This is negative for basic products prices. If American barriers to Chinese imports remain high, the hood of Chinese products that flood alternative markets such as India cannot be ruled out. In general, inflation risks seem to be mainly at the disadvantage. There may be no reason for the monetary policy committee to regret its recently pivot that prioritizes growth over inflation control.
Posted on April 17, 2025