Retail Inflation Eases to 2.05% in January, Lowest Since 2017

In January 2018, the retail inflation was at 5.07 percent.

Photo used for representation.

(Photo: iStock)

Retail inflation fell to a 19-month low of 2.05 percent in January due to fall in prices of food articles, mainly fruit and vegetables, coupled with easing of fuel cost, government data showed on Tuesday, 12 February.

The Consumer Price Index (CPI)-based retail inflation was revised downwards for the preceding month December to 2.11 percent from the earlier estimate of 2.19 percent, showed data from the Central Statistics Office (CSO).

In the year-ago month, January 2018, the retail inflation was at 5.07 percent.

Fruits, vegetables and eggs continued to witness deflationary trend during January this year, with their prices declining 4.18 percent, 13.32 percent and 2.44 percent, respectively, according to the CSO data released by the Ministry of Statistics and Programme Implementation (MoSPI).

The rate of price rise in the 'fuel and light' category was 2.20 percent in January 2019, compared with 4.54 percent in December 2018.

The overall food inflation during the latest month remained in the negative zone at (-)2.17 percent. It was (-)2.51 percent in December 2018.

"At 2.05 percent, CPI for January is at 19-month low. Extended winter remains supportive of decelerating food prices. The fuel component, too, has surprised on the downside," said Shubhada Rao, chief economist, Yes Bank.

The previous low than the latest print of 2.05 per cent was back in June 2017, when retail inflation was at 1.46 percent.

This, along with core inflation at 5.36 percent, presents a scenario of CPI year-on-year growth between 2 percent and 3 percent in the next 5 months. This raises the probability of rate cuts in April and beyond, she said.

ICICI Bank Head of Global Markets Group B Pasanna said: "India's industrial production data for December was in line with expectations and confirms our belief that the November print was more an aberration." The recovery in growth in consumer goods, especially non-durables, is encouraging.

"Our expectations for the next few months are also benign on headline CPI and, hence, we believe that there is a room for further accommodation in the next policy meeting," he said.