India’s headline and core inflation rates are set to converge in the coming months as the economy slows, increasing the chance of more interest rate cuts.
The core measure which strips out volatile fuel and food costs has remained sticky at around 6 per cent and is a key reason economists cautioned against more rate cuts after last week’s surprise easing. It softened to 5.4 per cent in January, according to economists at Yes Bank Ltd. and Axis Bank Ltd. Pranjul Bhandari, chief India economist at HSBC Holdings Plc, sees it slowing to as low as 4 per cent this year.