Headline inflation drops to the lowest in 25 month
- CPI inflation eased to 8.1% YoY (consensus: 8.3%, ICICI Bank: 8.1%) in February from prior reading of 8.8%. The drop in vegetable prices contributed ~58% of the drop in headline inflation.
- Core inflation eased to 7.9%YoY in February as against 8.1% YoY in January
- The RBI is likely to keep the policy rate unchanged in April policy meeting
Inflationary pressure eases furt her in line with our expectation
The consumer price inflation maintain ed the downward trend for the third consecutive month and came at 8.1% Yo Y in February’2014, the lowest level since January’2012, when it clocked 7.6% YoY. The print is in line with our estimates but lower than market expectation of 8.3% YoY.
The drop in inflation is primarily on account of easing vegetable prices. Vegetable prices eased to 14% YoY in February from 21.7% YoY in January. The drop in vegetable prices contributed ~58% of the fall in headline inflation.