NEW DELHI- India’s annual retail inflation in February rose at a faster than expected pace due to elevated food prices, government data showed on Tuesday.
Annual retail inflation eased slightly to 5.09 percent in February from 5.10 percent in January, but was higher than 5.02 percent forecast by a Reuters poll of 42 economists.
Food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.66 percent in February, compared with a 8.30 percent rise in January.
Despite retail inflation being within the mandated band of 2 percent -6 percent , uncertainties in food prices have worried policymakers.
Last month, the Reserve Bank of India (RBI) left its rates unchanged and signaled it would not lower interest rates until it achieves inflation of 4 percent on a durable basis.
It expects inflation of 5.4 percent for the current fiscal year that ends on March 31, and has projected 4.5 percent for the next fiscal year.
“It will take a few more months before it reaches the RBI’s 4 percent long-term target,” said Thamashi De Silva from Capital Economics. “We think that food price inflation will drop back only slowly over the coming months.”
Prices of cereals were 7.60 percent higher year-on-year in February compared to 7.83 percent in the previous month, while vegetable prices rose 30.25 percent compared to 27.03 percent in January, data showed. Pulse prices rose nearly 19 percent year-on-year in February.
Core inflation, which strips out volatile food and energy prices, is estimated at 3.3 percent -3.37 percent in February, compared with 3.6 percent in January, according to two economists.
