New Delhi, Feb 12 (IANS) Lower food prices, especially those of vegetables and cereals, brought down India's sequential retail price inflation in January 2021.
Sequentially, the Consumer Price Index (CPI), which gauges the retail price inflation, declined to 4.06 per cent from 4.59 per cent reported for December 2020.
Besides, the data furnished by the National Statistical Office (NSO) showed that CPI Urban declined to 5.06 per cent in January from 5.19 per cent in December.
The CPI Rural fell to 3.23 per cent last month from 4.07 per cent in December 2020.
As per the data, the Consumer Food Price Index decreased to 1.89 per cent last month from 3.41 per cent in December.
The CFPI readings measure the changes in retail prices of food products.
On a YoY inflation rate, prices of vegetables declined by 15.84 per cent and the sub-category of sugar and confectionery by 0.26 per cent.
However, prices of cereals and products and pulses and products rose by 0.07 per cent and 13.39 per cent, respectively, in December.
Furthermore, meat and fish prices increased by 12.54 per cent and eggs became dearer by 12.85 per cent.
In addition, the fuel and light category under the CPI rose by 3.87 per cent.
"Driven by a fairly broad-based moderation in the food inflation, the CPI inflation in January 2021 softented appreciably to a 16 month low 4.1 per cent, similar to our forecast (4.2 per cent)," said ICRA's Principal Economist Aditi Nayar.
"However, in an uncomfortable trend, many of the non-food categories recorded a rise in inflation in January 2021. With inflation expected to resume an uptrend in February-March 2021, we do not think that today's softer-than-anticipated print creates the room for an imminent rate cut."
Furthermore, Nayar said the food prices have displayed a mixed trend so far in February 2021.
"The rise in onion prices, as well as higher crude oil prices and their transmission into retail fuel prices are areas of concern that need to be monitored."
"Unless a cut in indirect taxes on fuels results in a sharp softening of the inflation trajectory, we expect the rate cut cycle to have ended."
Sunil Kumar Sinha, Principal Economist, India Ratings and Research, said: "Strong base effect in vegetable prices will keep food inflation low over the next six to nine months, however, a spike in vegetable prices during the summer months can't be ruled out."
"Increase in crude prices coupled with high taxes on petroleum products has resulted in fuel and light inflation increasing to 10-months high of 3.87 per cent in January 2021. In the FY22 budget, taxes and duties on petroleum products have remained the same."
Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research, said: "This declining trajectory has been driven by a sharp drop in vegetable prices which had held high for an extended period due to supply chain and adverse weather challenges in the earlier part of the year."
Nevertheless, Chowdhury said the inflation in animal protein products, edible oils and pulses continue to be in double digits.
"Further, the data indicates that some components of core inflation such as transport and communication are on a rise which reflect the potential inflationary pressures in the economy."
"With the rise in fuel prices, there is a risk of a sustained increase in core inflation amidst the ongoing economic revival. We expect RBI to remain cautious on the inflationary front and accordingly, calibrate its liquidity management policy."
New Delhi, March 6 (IANS) Singapore-based fund house, Bank Julius Baer, has upgraded India to overweight as it will be the fastest growing major economy in 2021.
"We change our stance on India from market-weight to overweight and see 15% upside from current levels with a Sensex price target of 58,450," it said in a note.
"An economic recovery is underway, and we look for 9% y/y GDP growth this year, followed by 7% next year. We look for earnings per share to grow on average over 25% over the next 3 years. It would be unprecedented for the stock market to fall in an environment of such strong growth," it added.
Scientists think "herd immunity" has been achieved in large parts of the country, which would explain why daily new cases have fallen from almost 100,000 in September to less than 15,000 presently.
Lockdowns are imposed still in specific areas that experience Covid outbreaks, but high frequency data shows that has not stopped a continuous recovery following the nation-wide lockdown from March to July of last year. For example, anonymized data gathered shows the mobility of people using Android-based smartphones is almost back to pre-Covid levels, it added.
An Initial Public Offering of LIC, India's largest insurer with $464 billion in assets, is planned for the second half of FY2022. The divestment of this company in particular will enable the government to manage its fiscal position.
The budget has set up a special purpose vehicle to sell the idle/non-core assets (especially land) of SOEs. Much of the idle land is well-situated and could be made productive, benefiting economic growth. Divestment of LIC and BPCL remains the key to meet the fiscal deficit target without compromising spending in FY22E, the research said.
With only the brief exception at the bottom of the Global Financial Crisis, in recent history India's stock market has always traded at a premium to its emerging market counterparts. The current premium of 40% is around the long-term average, it added