India's food inflation to moderate in coming months, says government report

FOOD inflation in India should continue to ease in coming months, with healthy winter crops and manufacturing profitability likely to support economic activity in the next fiscal year, a monthly government economic report said on Tuesday (Feb 20).

India’s retail inflation rate touched a three-month low of 5.1 per cent last month as prices of some food items rose more slowly, with food inflation rising 8.3 per cent, compared with a 9.53 per cent rise in December.

India’s central bank said on Tuesday that inflation expectations may stabilise and edge down going ahead but renewed upward pressures on prices of cereals and proteins cannot be ruled out.

In the monthly report released on Tuesday, the government said it sees “bright” prospects for capital formation, given the upturn in the private capital spending cycle, while demand for household consumption is expected to improve.

“Prospects of healthy rabi harvesting, sustained manufacturing profitability and underlying service resilience are expected to support economic activity in FY25,” the government said in its report.

Continued attacks in the Red Sea, supply disruptions and persistent underlying inflation in developed countries could extend tight monetary conditions, the report added. REUTERS