HindustanTimes Fri,28 Nov 2014

January wholesale inflation sinks to 8-month low

HT Correspondent, Hindustan Times  New Delhi, February 14, 2014
First Published: 12:39 IST(14/2/2014) | Last Updated: 01:06 IST(15/2/2014)

India’s wholesale inflation rate eased to an eight-month low of 5.05% in January on plunging vegetable prices, giving the UPA government a reason to smile as it struggles to keep prices down in an election year.


The arrival of fresh supplies of seasonal vegetables has pushed the inflation rate down over the last two months, from 7.52% in November to 6.16% in December to 5.05% in January, data released on Friday showed.

January’s inflation rate is the slowest since May 2013, when wholesale prices increased by 4.58%.

Retail inflation — a more realistic index as it captures shop-end prices — eased to a two-year low of 8.79% in January from 9.87% in the previous month.

Wholesale food inflation slowed to 8.80% in January from 13.68% in the previous month, while  vegetable inflation moderated to 16.6% during the month compared to 57.33% in December 2013. Manufactured product inflation, however, inched up to 2.76% from 2.64%.

Similar trends were also noticeable in retail price data, where non-food, non-fuel inflation or what is called core retail inflation — a more closely watched index as it captures shop-end prices of industrial goods — edged up to 8.1% in January from 8% in the previous month, implying that prices continues to remain in the worry zone.

The Reserve Bank of India (RBI) has raised lending rate three times in the last five months in an attempt to tame inflation by cooling demand.  This has raised home loan EMIs while hitting growth.

Business leaders have been demanding a cut in interest rates.

“The declining trajectory of inflation should spur the RBI to revisit its monetary policy stance and cut policy rates to rejuvenate growth in the industry which has been hit by high interest costs and flagging investment,” said Chandrajit Banerjee, director general of Confederation of Indian Industry.

India’s industrial output fell by 0.6% in December, the third successive month of contraction.

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