Headline Inflation Current Affairs - 2019
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The Central Statistical Office (CSO) has released the data of Inflation for the month of February 2019. The data shows that:
- Retail inflation was at a four-month high of 2.57 per cent in February 2019 due to costlier food articles. The retail inflation was highest since October 2018 when it stood at 3.38 per cent.
- Consumer Price Index-based inflation for January 2019 was revised down to a 19-month low of 1.97 per cent from an earlier estimate of 2.05 per cent.
- Food inflation at (-) 0.66 per cent in February 2019 was lower against 3.26 per cent in the same month last year.
- The consumer food price index increased by 0.15 per cent in February against January 2019.
- The prices of Protein-rich items such as meat & fish and eggs witnessed a quick rise in prices at 5.92 per cent and 0.86 per cent respectively in February.
- The prices of cereal and products went up at 1.32 per cent.
- Fruits and Vegetable prices continued their declining trend.
- In the fuel and light category, the rate of price rise slowed to 1.24 per cent from 2.20 per cent in January.
With the headline inflation reading at 2.57 per cent and industrial production growth on the downside at 1.7 per cent, economists see a case and space for one more rate cut of 25 bps by RBI in April to support growth.
Tags: Central Statistical Office • Consumer Price Index • CPI • CSO • Food Inflation
The six-member monetary policy committee (MPC) headed by RBI Governor Shaktikanta Das has lowered the repo rate by 25 basis points to 6.25 per cent in a 4-2 vote.
Important decisions by the MPC
The features of the decisions taken by MPC are:
- Together with lowering the repo rate by 25 basis points to 6.25 per cent, the policy stance has been changed to neutral from calibrated tightening.
- The shift in stance to neutral provides flexibility to meet growth challenges.
- The change in stance also signals higher chances of more cuts in the coming months if inflation persisted within tolerable limits.
- A large part of the current investment recovery has been driven by government spending and it was necessary to broad base the revival with a private sector boost.
Other announcements made by RBI
- The limit of collateral free bank loans for farmers to Rs 1.6 lakh from Rs 1 lakh
- Greater operational freedom for Banks to offer interest rates to bulk deposits.
- The definition of “bulk deposits” has been increased to Rs 2 crore from Rs 1 crore currently.
- The headline inflation is likely to persist within the RBI’s tolerable level of 4 per cent.
While the decision to change the monetary policy stance was unanimous, Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Das and three others voted for a cut in interest rates.