New Delhi [India], March 7 : India's consumer price inflation (CPI) is expected to decline to 4.1 per cent for February 2025, according to a report by the Bank of Baroda (BoB).
However, the report cautioned that certain factors could keep food prices elevated, such as rising global edible oil prices, inflationary tariff policies, and an anticipated hotter summer.
It said "We expect CPI to settle at 4.1 per cent in Feb'25. However, we completely do not rule out any upside pressure on food prices arising from stickier edible oil prices globally".
The BoB Essential Commodity Index (BoB ECI), which tracks key household goods, also showed a slowdown in February, moderating to 2.4 per cent year-on-year. This decline was driven mainly by falling prices of vegetables like tomatoes and potatoes.
Additionally, inflation in pulses remained under control due to improved supply conditions. A recent reduction in milk prices further contributed to the downward trend in overall inflation.
Despite the easing of inflation in some categories, certain risks persist. Global asset price volatility, particularly in gold and base metals, has not yet significantly impacted inflation, as energy prices have remained relatively low.
However, tariffs on metals could drive up prices in the coming months. In February, increased demand led to higher prices for metals such as copper and zinc.
A major concern highlighted in the report is the persistence of high edible oil prices, which could continue to push food inflation upward. Additionally, extreme heat could lead to supply disruptions for key crops.
The Indian Meteorological Department (IMD) has already recorded above-normal temperatures in states like Maharashtra, Odisha, and Bihar, which are major producers of onions, tomatoes, and potatoes, respectively.
The report emphasized that close monitoring of temperature conditions will be crucial, especially for wheat crops, which could be impacted by rising temperatures. However, government measures to improve logistics and stabilize prices for perishable goods are expected to provide some relief.
While inflation is expected to moderate, uncertainties related to global commodity prices and weather conditions could influence price trends in the coming months.
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