Perspective on IIP & CPI Numbers by Mr. Vivek Rathi - National Director, Research, Knight Frank India
Below the Perspective on IIP & CPI Numbers by Mr. Vivek Rathi - National Director, Research, Knight Frank India
“While food inflation significantly eased in Feb 2025, leading to an overall deceleration in the CPI to 3.6%, inflationary concerns remain persistent. Core inflation rose by 4%, reaching a 15-month high, with no signs of easing in the near term. We anticipate that inflationary pressures will continue in the coming months. The sharp depreciation of the rupee is increasing import costs, which will eventually be passed on to consumers, making consumer goods more expensive. Additionally, this year's monsoon season is expected to experience neutral El Nino conditions, potentially limiting rainfall and driving up food prices. Therefore, we believe that inflationary concerns will persist in the near term. Compounding the issue, domestic consumption has also slowed, as evidenced by declining sales of various consumer goods.
At the policy level, both the RBI and the government have implemented measures to revive growth, such as policy interest rate cut and reduction in income tax to increase disposable income with households. To further stimulate growth, the RBI is likely to implement another repo rate cut in the next MPC meeting in April. While this move may be inflationary, it is necessary to support growth particularly in the segments like housing where credit support is essential. Over the last year we have seen that the slowdown in the lower value housing category has also progressively spread to the mid value housing in some markets. Policy intervention to strengthen homebuyer affordability will be essential to support housing consumption at the bottom of the pyramid.”
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