Retail Inflation Could Slow Further Going Ahead: Experts

The annual retail inflation eased to a four-month low of 5.91 per cent in March from 6.58 per cent in the previous month, helped by a smaller increase in food prices, government data showed on Monday.

Here is what experts make of inflation at four-month low:

Karan Mehrishi, Lead Economist, Acuité Ratings & Research, Mumbai

"The March CPI number is already showing the inflationary tendency of the lockdown on domestic consumption. While it was so believed that food inflation will come down dramatically in March, it wasn't the case. Items such as vegetables inflated by a whopping 18.63 per cent. Core inflation however remained well contained, recording a sub 4 per cent number."

"The month of April and May are expected to see further increases in food inflation and related primary consumption items. Nevertheless, the March number notes the closure of FY20, and combined CPI number has averaged 4.7 per cent, which is well over the RBI's target of 4 per cent. It will be difficult for the RBI to raise rates at this time, despite inflationary tendencies."

Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram

"The NSO signalled that the inflation release is not comprehensive as field surveys were suspended due to the lockdown. Therefore, it does not reflect if there were any price pressures due to panic buying of essential goods during the second half of March 2020."

"In the coming weeks, the focus will be on the supply side disruptions while demand side pressures remain absent. On the balance, food prices are likely to remain contained in H1 FY20 on account of record rabi food grains and horticulture production."

"Going forward, we expect inflation to average at 5.0 per cent in Q1 and 4.4 per cent in Q2 FY21."

Sujan Hajra, Chief Economist, Anand Rathi Securities, Mumbai

"India's present monetary policy will continue irrespective of the level of inflation. We see a possibility of the logistical problems leading to higher inflation in April. But, the Reserve Bank of India will look through that. Right now the objective of the policy would be to revive normalcy post the lockdown."

Anagha Deodhar, Economist, ICICI Securities, Mumbai

"Food inflation has continued to ease, driven by falling prices of vegetables and pulses. Also, the disinflation in March is broad-based with all categories of CPI registering lower inflation. The nationwide lockdown affected only the last week of March hence in the coming months we will see fuller impact of lockdown on inflation numbers."

"In the monetary policy minutes released earlier today, MPC members noted that inflation is expected to remain benign due to weak aggregate demand, sharp fall in international oil prices and record high food production. I concur with this view. Additionally, I think core inflation is also likely to remain soft reflecting weak spending capacity."

Radhika Rao, Economist, DBS Bank, Singapore

"Undercurrents reflect a modest month-on-month rise in food components, but offset by low energy prices and subdued demand activity."

"On food, despite signs of a bumper harvest, market arrivals have dropped, particularly perishables and foodgrains. Besides widening closure of wholesale markets, these supply shortages reflect logistical delays due to delays in intra-state movements due to the lockdown and labour shortage."

"These are likely to cause short-term distortions in late Q1 and Q2. Beyond these incipient pressures, inflation is expected to trend down for rest of FY21 and average around 4 per cent in FY21."

Rahul Gupta, Head Of Research-Currency, Emkay Global Financial Services, Mumbai

"As expected India's March CPI dropped to 5.91 per cent vs 6.6 per cent in February. There has been a drop in food and vegetable prices which led the inflation figure to fall below the upper band of RBI's target."

"Due to the lockdown, growth in both input costs and prices charged have weakened in March, suggesting retail inflation could slow further and give the RBI more scope to cut interest rates further or taken unconventional measures."