CPI inflation to remain at 2.7%, say economists

Economists have suggested that the consumer price index inflation (CPI) would remain at 2.7 per cent in the current fiscal due to declining food prices, robust agriculture output and favourable monsoon.

The 2.7 per cent estimate is 40 basis point below the Reserve Bank of India’s forecast for the current financial year. The RBI’s Monetary Policy Committee, during the August meeting, revised inflation projection to 3.1 per cent.

In July, the retail inflation slipped to an eight-year low of 1.55 per cent largely due to subdued prices of food items, including vegetables and cereals, the government data released on Tuesday stated.

“Normal rainfall has been recorded in key grain producing states. Another positive factor is reservoir levels which are higher than 10-year average, this bodes well for rabi output. Meanwhile WPI inflation has eased,” the IDBI bank said. Barclays’ report echoed similar sentiments, highlighting current vegetable price momentum undershooting median run rate.