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Despite the pace of price rise in some food items like onions, potatoes and pulses hastening in February, overall retail inflation is likely to have stayed at about 5.1% in February, the same level as January, Bank of Baroda (BoB) economists said on Thursday.
Prices of about half of the 20 items tracked by the bank’s Essential Commodities Index (ECI) saw some momentum building up last month, with the index rising 4.2% year-on-year, compared with 3.8% in January.
A sharp uptick in prices was seen in potatoes, which rose 16.6%, tomatoes (up 30.3%), pulses like chana dal or gram dal (15%) and urad (15.5%) compared with February 2023 levels. On a sequential basis, prices rose for 16 of the 20 commodities in the index, including onions, vegetables, rice, pulses, edible oils, and sugar, compared to their January prices.
“For the first 5 days of March, the BoB ECI has inched up further by 5.5%, on a year-on-year basis. High frequency price data have seen some momentum in February as well as March,” the bank’s economist Dipanwita Mazumdar said.
“We expect inflation measured by the Consumer Price Index (CPI) to settle at around 5.1% in February̤,” she reckoned. Although base effects from the high inflation last year would provide some degree of comfort in the coming months, Ms. Mazumdar said that if the recent broad-based pressure in prices persist, the headline inflation rate may not get near the central bank’s 4% target level.
While some hailstorms and rain in northern parts of India might cause supply-side disruption and spike the prices of some crops, pulses remain a concern as their output is expected to be sub-optimal in both the Kharif and Rabi seasons.
