India's annual retail inflation eased to a four-month low of 5.91% in March from 6.58% in the previous month, helped by a smaller increase in food prices, government data showed on Monday.
PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI
"CPI inflation slowed to 5.9% in March led mainly by vegetables. However, this number could get revised significantly since only 66% of price quotes were considered and the remaining were extrapolated."
"Beyond March there is a concern that extended lockdown is likely to create shortages in the economy and hence increase price pressures. However, much depends on the contours of the lockdown likely to be announced by the prime minister."
SHASHANK MENDIRATTA, ECONOMIST, IBM, NEW DELHI
"Today's inflation print moved within the RBI's target band of 2%-6%. As expected, the decline was driven by a fall in food prices and fuel inflation. We expect both these factors to aid inflation in coming months. The collapse in crude prices is especially supportive for inflation outlook."
"While core inflation remained steady during the month, the shock to demand from the COVID-19 outbreak is likely to weaken demand side pressures and may ease core inflation. Essentially, supportive demand and supply side factors will together work their way to soften prices pressures in coming months."
ADITI NAYAR, PRINCIPAL ECONOMIST, ICRA, GURUGRAM
"The CPI inflation finally nudged below the upper limit of the MPC's 2%-6% band in March 2020, on the back of the expected correction in food prices."
"However, this relief may be arrested in the immediate term, with a considerable likelihood of an uptick in urban retail inflation during the period of the lockdown, followed by a subsequent resumption of the correction in the CPI inflation as the situation normalises."
MADAN SABNAVIS, CHIEF ECONOMIST, CARE RATINGS, MUMBAI
"CPI inflation came in at 5.9% which is lower than our forecast of 6.5%. The number does give a sense of improvement in inflation, which is misplaced given that the real impact of the lockdown will be felt in April as prices of food items have increased quite sharply. The food price inflation of 8.7% will tend to increase."
"With the lockdown across the country ... this can push food inflation towards the 10% mark. However, core inflation will trend downwards as service prices would not be changing and those products with MRP would not witness change in prices even with supplies declining."
"We can expect CPI inflation in April to be above 6%. However, this number will not be relevant for any monetary action of RBI which will be driven by other considerations."
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%. Core inflation however remained well contained, recording a sub 4% 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%, which is well over the RBI's target of 4%. 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% in Q1 and 4.4% 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 smaller pace of decline in food components (month on month), 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% in FY21."
RAHUL GUPTA, HEAD OF RESEARCH-CURRENCY, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI
"As expected India's March CPI dropped to 5.91% vs 6.6% 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."
(Reporting by Philip George, Chris Thomas, Anuron Kumar Mitra, Sachin Ravikumar, Nallur Sethuraman and Derek Francis in Bengaluru; Compiled by Shounak Dasgupta)