Perspective on CPI Data by Mr. Sanjay Kumar, MD & CEO, Rassense Pvt Ltd
Below the Perspective on CPI Data by Mr. Sanjay Kumar, MD & CEO, Rassense Pvt Ltd
“The CPI inflation has softened to a 5-month low. The softness is largely due to the fall in food prices. The food inflation needs to be in check for a steady consumption in the broader economy. The retail inflation near the 4%-mark augurs well from the policy point of view as it keeps the chances of a rate cut in April RBI meeting open. Having said that, the headline retail needs to be in check for a low interest rate regime, that helps the pick-up in economic activity and private investment.
Overall, the food inflation is largely a supply side issue and seasonal changes may lead to a temporary spike in prices. All sectors dependent on food and Agri-commodities will now wait and expect a good monsoon year and stable geopolitical situation in order to keep inflation in check as any rise in prices of crude may also lead to a spike in inflation.
This softening of inflation will reflect positively on the food services and the hospitality sectors at large, as lower food prices mean lower cost for raw materials for sectors in discussion. This along with an increased discretionary income post the budget tax-cuts sets up the food industry higher growth going forward.
However, key concern hovers around improving agricultural productivity, especially in an environment of shrinking land holding. This becomes a barrier in employing modern technology. India needs higher organised credit flow into the agricultural sector alongside better post-harvest technology solutions so that inflation is not linked to the vagaries of nature but driven more by demand supply variables. As PM Modi highlights India’s focus on AI adoption and advancements, companies are increasingly adopting these practices across sectors.”
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