(Reuters) -India’s annual retail inflation rose to 5.69% in December from 5.55% the previous month, government data showed on Friday.
A Reuters poll of 56 economists had forecast a rate of 5.87%.
COMMENTARY:
DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS AND RESEARCH, GURUGRAM
“Core inflation has declined to 48-month low of 3.89% in December 2023. Declining core inflation at a time of strong economic growth is a conundrum.”
“We expect inflation in January 2024 to decline to 5.3%-5.5% range mainly due to base effect. Strong economic growth and inflation averaging more than 5% in fiscal 2024 suggests a long pause in policy rates.”
UPASNA BHARDWAJ, CHIEF ECONOMIST KOTAK MAHINDRA BANK, MUMBAI
“December inflation came in softer than expectations largely led by sharper moderation in vegetable prices. Meanwhile, the core inflation came in line with our expectations.”
“We expect the Monetary Policy Committee (MPC) to continue to focus on its 4% inflation target and keep repo rate and policy stance unchanged in the February policy.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“Inflation could trend lower in the coming months and we see headline inflation moving towards 5%-5.2% by March 2024.”
“Despite the positive surprise on the inflation print, we do not see the Reserve Bank of India changing its stance in the February policy and continue to see a move on rates coming in the second quarter of fiscal 2025.”
THAMASHI DE SILVA, ASSISTANT INDIA ECONOMIST, CAPITAL ECONOMICS, LONDON
“We expect food price inflation to decline only gradually over the coming months.”
“We also expect energy inflation to remain flat in the first half of the year, though an escalation of tensions in the Middle East is a clear upside risk to our forecast.”
“In all, headline inflation will grind lower over the coming months and probably won’t sustainably reach the 4% midpoint of the 2%-6% target range until the second quarter.”
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI
“India’s December CPI came in line with our expectation of 5.75%, aided by high base effect and continued moderation in core inflation.”
“We continue to see continuation of this trend and project fiscal 2025 CPI at an average of 4.5%.”
“We see the (Indian central bank’s) Monetary Policy Committee embarking on its first rate cut in the second quarter of fiscal 2025.”
ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI
“Inflation is clearly on a downward trend but both the absolute levels and supply chain risks due to the Middle East crisis rule out cuts earlier than the middle of 2024.”
“Bonds could rally a tad and the case for a somewhat more accommodative stance of banking system liquidity becomes stronger.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“Food inflation is optically higher on the year ago on base effects, though sequentially pressures have eased, along with a benign core reading.”
“Average inflation for the quarter is below the Reserve Bank of India’s December projection, providing comfort to the policy committee, with rates likely to be kept on hold in the first half of 2024.”
(Reporting by Kashish Tandon, Rama Venkat, Ashna Teresa Britto, Dimpal Gulwani, Nishit Navin and Ashish Chandra in Bengaluru; Editing by Shilpi Majumdar)
