The sharp fall in India’s headline consumer price inflation in January vindicates last week’s rate cut by the Reserve Bank of India, and suggests that more easing lies in store, says Harry Chambers at Capital Economics.

India's retail inflation slowed to a five-month low in January as food price inflation eased, boosting the odds of another rate cut in the South Asian economy where growth is slowing amid the escalating threat of a global trade war.

Experts suggest that CPI inflation is likely to ease further in February and see the RBI MPC cutting rates by 25 basis points in April.

The fall in inflation reinforces the rate cut of 25 basis points last week by the Reserve Bank of India, which has the mandate to keep inflation in 2-6 per cent range

The Indian central bank helmed by RBI Governor Sanjay Malhotra is expected to cut policy rate again in April on diminishing consumer inflation

The Indian government has been steadily lowering its full-year real GDP forecasts, after the economic growth missed expectations by a large margin in the quarter ended September, when its grew by 5.4% — its slowest expansion in nearly two years.

India's retail inflation eased to a five-month low of 4.31% in January from 5.22% in December as food price inflation declined, government data released on Wednesday showed. Annual retail inflation in January was lower than economists' estimate of 4.

Retail inflation in India eased to a five-month low of 4.3% in January due to moderating vegetable prices, while industrial output growth slowed to 3.2% in December, largely due to sluggish performance in the manufacturing sector.

This could clear the way for another rate cut by the Reserve Bank of India, which slashed rates from 6.5% to 6.25% after its monetary policy meeting on Feb. 7.