New Delhi, Sep 12 (SocialNews.XYZ) With the inflation in the second quarter of FY25 likely to remain below the Reserve Bank of India’s (RBI) forecast of 4.4 per cent, amid the cooling of food prices, the central bank may consider rate cuts in the forthcoming Monetary Policy Committee (MPC) meetings, industry analysts said on Thursday.
The year-on-year inflation rate (3.65 per cent), based on the All India Consumer Price Index (CPI), for the month of August was the second lowest in the last five years.
Dr Vijay Kalantri, Chairman of MVIRDC World Trade Center in Mumbai, said that it has now been one year since CPI inflation stayed below the upper threshold of 6 per cent.
"Food inflation, which had been the primary driver, remained under 6 per cent for the second consecutive month, after exceeding that level for 12 straight months since July 2023," he said.
Conversely, core inflation, driven by a revival in rural consumption, has risen for the third consecutive month to 3.41 per cent.
"Given the current inflation trends, it is likely that inflation for the second quarter will remain below the RBI's expectation of 4.4 per cent," Kalantri said.
India’s industrial output growth increased to 4.8 per cent in July, following an upwardly revised growth of 4.7 per cent in the previous month.
The moderation in the growth of the electricity and mining sectors was balanced by an acceleration in the manufacturing sector.
According to Rajani Sinha, Chief Economist, CareEdge Ratings, an improvement in kharif sowing amid a good monsoon bodes well for the private consumption demand. "Overall, a sustained and meaningful improvement in consumption and private capex remains critical for the performance of industrial activity," she said.
Sanjeev Agrawal, President, PHDCCI, said that going ahead, it is expected that rising kharif production boosted by an above-normal southwest monsoon will contribute to further softening CPI inflation, with further improvement in food supplies. The consistent growth of IIP, supported by growth in manufacturing, capital goods and intermediate goods indicates steady momentum in India’s manufacturing sector, Agrawal added.
Source: IANS
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