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Lower Inflation print brightens up rate cut prospects

ICICIdirect Research 13 Mar 2025 DISCLAIMER

CPI inflation came down sharply to 3.6% in February 2025, lower than market expectation of around 3.9% and 4.3% in January 2025.

Food inflation which was the major contributor has continued its declining trend in last 4 months. Food inflation is now at 3.7% versus 6.0% in January and is down from highs of 10.9% in October 2024.

Core inflation came marginally higher on expected lined at 4.0% in Feb vs 3.7% in Jan25.
Within Food, Vegetables inflation witnessed a de-growth of 1.0% due to higher base and continuous decline on month-on-month basis since last 4 months. Apart from vegetables, pulses also saw de-growth of 0.4% while spices continue to witness decline on a higher base.

Outlook remain favourable for both food and non-food inflation due to fresh crop arrival and lower crude oil prices. The expectation of a rate cut in April 2025 MPC meeting has got cemented with current inflation print.

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