India’s consumer price index (CPI)-based inflation eased to 3.61% in February, down from 4.26% in January, according to data from the Ministry of Statistics and Program Implementation. Food and beverage inflation also moderated to 3.84% from 5.68% in January.
For the first time in six months, inflation has fallen below the RBI’s 4% target.
With the RBI prioritizing liquidity, there is a possibility of another 25 basis point repo rate in April.
This is positive news for the Indian economy.
Lower inflation reduces interest rates, benefiting borrowers, boosting investment, and making credit more affordable.
Key Sectors That Stand to Benefit
Banking & Financial Services
Lower borrowing costs → Higher credit demand (home, personal, and business loans)
Margin improvement for banks and NBFCs
Real Estate
Cheaper home loans → Increased housing demand and sales growth
Consumer Goods & FMCG
Higher real incomes → Increased consumer spending → Better growth prospects for FMCG companies
Auto Sector
Lower EMIs on car and two-wheeler loans → Higher sales, especially in entry-level & mid-segment vehicles
Bond & Debt Markets
Repo rate cut → Lower bond yields → Higher returns on long-duration debt funds
Government securities & corporate bonds could see price appreciation