The retail inflation has come recorded a decline to 5.18% from 5.69% for the month of February 2016. This is the first time after six months that CPI inflation records a fall. The present decline was contributed by fall in food prices including vegetables, pulses and fruits.
So far India’s inflation data goes in contrast to the global trend. Major developing countries including China are in low inflation trajectories.
Form many developed countries deflation and steep recession are the status on price and macroeconomic fronts. Most frequently, there is talk of deflation and decline in demand.
For India, other data especially industrial production indicators are consistent with the declining inflation.
Though the return of inflation is a consolation news for the central bank, it is unlikely that the RBI will come out with a rate cut measure. Most other macro-data are way below a healthy level. Hence a onetime reduction of the price level will not bring the RBI into the rate hike mood.
*********
