Falling Food Prices Seen Easing Retail Inflation in February

March 14, 2016: The wholesale prices have fallen for a 16th straight month in February. It will ease the retail inflation in the month. Because of the fall in food items, RBI is expecting a rate cut next month.

The finance minister, Mr. Arun Jaitley has set a fiscal deficit target of 3.5 per cent of GDP for the next financial year. He has announced it in the budget speech 2016. So, it is expected that the Reserve Bank of India can cut rates in April.

 

Wholesale prices

 

"The recent budget delivered on the targets and hence opens the door for a rate cut in April before entering into a prolonged pause," Radhika Rao, an economist at DBS Bank in Singapore said in a note on Friday.

The annual consumer prices have gained 5.6 per cent in this month. The number was 5.69 per cent for the month of January. The RBI used to track consumer prices to freeze its interest rate policy.