Recently, retail and wholesale inflation figures have been revealed. Retail inflation decreased more than 90 basis points in the country. Due to which retail inflation figures in the country had come to 4.31 percent at the lower level of 5 months. However, in the first week of February, the RBI Governor had said that the average inflation figure of the country can be 4.8 percent in the current financial year. Now the inflation figure in the country has come down less than average inflation in January and in the months of February and March, the figure of inflation is expected to decrease. In such a situation, the meeting to be held in April can see a cut in interest rates again. Let us also tell you what kind of report has come out on it.
Repo rate may be cut in April
According to a report by Centrum Institutional Research, the recent decline in retail inflation in January may provide adequate space to the Reserve Bank of India (RBI) in the near future to cut 25 basis points (BPS) rates. The report said that we hope that inflation will be an average of 4.8 percent in the financial year 2025. This sharp recession in inflation will provide enough space to the RBI to cut 25 BPS rate. According to the report, the decline in inflation last month was mainly due to the fall in foods, especially vegetable prices. As soon as fresh vegetables and pulses come in the market, there is a possibility of inflation pressure and less.
Inflation figures are better
The report suggested that this trend will help in bringing overall inflation to an average of 4.8 percent for FY 2025. In January, the headline retail CPI declined from 5.2 percent to 4.3 percent in December 2024. One of the major reasons for this decline was a significant decline of 237 BPS in food prices. Year after year, food and beverages (F&B) inflation declined from 7.7 percent in December to 5.7 percent in January. The fall in vegetable prices played an important role in reducing overall inflation, as the fresh yield helped reduce prices.
Focus will also be on money
The report said that with the less the concerns of inflation, RBI will have more flexibility to focus on supporting economic growth. However, it also warns that there is a need to closely monitor the falling rupee, as it can affect domestic inflation. The Monetary Policy Committee (MPC) has maintained a “neutral” stance in its fresh meeting, indicating that future rate cuts will depend on the comprehensive economic figures coming. If inflation remains under control, the RBI can consider the rate of 25 BPS to support economic activities.