New Delhi, 13 June (IANS). Inflation in India is expected to be 2.5 percent on an average in the next six months, lower than the RBI’s 3.5 percent forecast. This information was given in a report released by HSBC on Friday.
According to HSBC Global Research, “We think low inflation figures are due to the high base of the previous year. The prices of vegetables have increased by 0–13 percent in the first 10 days of June.”
The monsoon season started early, but since then the rain has slowed down. Despite this, sowing of summer crops, especially rice and pulses is going well.
The report states that last year’s strong grain production means that food stores are filled and the government may choose to gradually release stocks to control the inflation of food grains over a period of 2 years.
Headline and core inflation (except gold) at 2.8 percent, which is significantly below the central bank’s 4 percent target, while the food prices continue to fall.
Food prices were also in deflation for the fifth consecutive month, which is 0.2 percent less on a monthly basis. The gradual speed in fruits, eggs, fish, meat and sugar prices was also benign.
High prices of gold have kept core inflation high.
Gold holds 1.1 percent in CPI basket. The price of yellow metal has increased by more than 30 percent in recent months. Except for gold, the core inflation was 3.5 percent on an annual basis.
The report further states, “If gold prices fall in the second half of 2025 (as our commodity team is forecast), the core inflation may fall rapidly. Also, strong rupees and falling prices of commodity indicate that core inflation is likely to be low in the coming months.”
The HSBC report said, “We estimate that the RBI MPC meetings of August and October will have some stagnation over the rate cut. However, we believe that the RBI will cut the final 25 BPS in the December meeting, which will increase the repo rate by 5.25 percent by the end of 2025.”
-IANS
SKT/
