Inflation in January eases to 8-month low of 5.05 pct on cheaper vegetable prices

Feb 15 2014, 14:24 IST
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Wholesale prices-based inflation eased to 5.05 per cent in January, helped by moderating food prices. Wholesale prices-based inflation eased to 5.05 per cent in January, helped by moderating food prices.
SummaryInflation in food articles came down sharply to 8.80 pct in January against 13.68 pct in Dec.

Providing relief to the common man, inflation in January eased to an eight-month low of 5.05 per cent, helped by a moderation in food prices.

The second straight month of deceleration in inflation as measured by the wholesale price index also gives a breather to the Reserve Bank, which has been trying to tame rising prices.

WPI inflation was at 6.16 per cent in December compared with 7.52 per cent in November.

January's inflation rate is the slowest since May 2013, when wholesale prices increased 4.58 per cent.

Inflation in food articles in January came down to 8.8 per cent as against 13.68 per cent in the preceding month, according to data released today.

"Food inflation remains elevated in spite of the overall favourable monsoon and agricultural production scenario, highlighting the demand-supply gaps and issues related to the supply chain," ICRA Senior Economist Aditi Nayar said.

As per the WPI data, prices of vegetables rose 16.6 per cent in January compared with a 57.33 per cent increase in December.

Onion prices climbed 6.59 per cent compared with a 39.56 per cent increase in December. Potato prices climbed 21.73 per cent in January.

Fruits were cheaper, as were protein-rich items such as eggs, meat and fish. However, inflation in milk inched up slightly to 7.22 per cent in January.

Data released this week showed retail inflation declined to a two-year low of 8.79 per cent in January, while industrial output in December shrank 0.6 per cent, prompting calls by industry for an interest rate cut to boost growth.

"We must and very urgently concentrate on reviving growth for the manufacturing sector and lay special emphasis on resolving problems of the MSME sector also," Ficci President Sidharth Birla said.

According to the WPI data, inflation in primary articles and in the fuel and power segment was at 6.84 per cent and 10.03 per cent, respectively.

Inflation in manufactured products such as sugar and edible oils was up marginally at 2.76 per cent on a monthly basis.

The Reserve Bank had increased a key interest rate by 0.25 per cent to 8 per cent in its Third Quarter Review of Monetary Policy on January 28. The central bank factors both retail and wholesale price based inflation data in its monetary policy.

"In the absence of an upside surprise in the inflation trajectory or in inflation expectations, it is likely to hold policy rates steady

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