India's February CPI Inflation Holds Steady at 5.09%

India's headline retail inflation remained stable at 5.09% in February, barely changing from January's 5.10%, according to data released by the Ministry of Statistics and Programme Implementation on March 12.

Consistent Performance within RBI Tolerance Range:

CPI inflation has sustained within the Reserve Bank of India's (RBI) tolerance range of 2-6% for the sixth consecutive month. However, it has surpassed the medium-term target of 4% for 53 consecutive months.

RBI Monetary Policy Committee Meeting Looms:

The latest inflation figures precede the RBI's Monetary Policy Committee (MPC) meeting scheduled for April 3-5. Despite the policy repo rate remaining at 6.5% in the February 8 meeting, inflation dynamics will likely influence the committee's decisions.

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RBI's Inflation Forecasts:

The central bank projects CPI inflation at 5.0% in the current quarter, expected to ease to 4.0% in July-September. However, a subsequent rise to 4.7% is anticipated in the first quarter of 2025.

Economic Growth Impact:

Despite India's policy rates being at their highest in almost eight years, economists believe the MPC may take a cautious approach, considering the economy's robust growth. Ensuring sustained and acceptable levels of inflation is paramount.

Food Prices:

Certain key food items exhibited mixed trends in February. Cereals and meat/fish prices increased (0.5% and 2.3% higher MoM, respectively). Spices, eggs, and edible oils saw declines (1.9%, 1.2%, and 0.6% lower MoM, respectively). Vegetable prices remained largely steady, with a marginal 0.1% decrease compared to January.

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Sequential Price Momentum:

February witnessed subdued sequential price momentum. Housing prices rose by 0.5% MoM, while other CPI basket groups posted modest increases in the range of 0.1-0.2% MoM.


India's inflation landscape remains stable, but the MPC faces a delicate balancing act, considering the broader economic context. As the economy continues to outperform expectations, the central bank's decision-making will play a crucial role in maintaining both inflation control and economic growth. The upcoming MPC meeting will be closely watched for insights into the RBI's stance on inflation management.

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