CPI Inflation Falls To An 18-Month Low

Lloyd Doyle
January 14, 2019

The central bank last month trimmed H2FY19 (October-March) inflation forecast to 2.7-3.2 percent from 3.9-4.5 percent earlier.

Annual wholesale price inflation edged down to 3.80 percent last month, as food prices hardly rose and fuel cost increases nearly halved, government data showed on Monday.

According to the data released by the Ministry of Statistics and Programme Implementation, food inflation remained in the negative zone at 2.51 per cent compared to (-) 2.61 per cent in the November.

Vegetables, too, saw deflation at 17.55% in December, compared to 26.98% in the previous month. Inflation in the "fuel and power" basket in December slumped to 8.38 per cent, almost half of 16.28 per cent in November.

As per minutes of the Monetary Policy Committee meeting held on December 5, former RBI Governor Urjit Patel said that broad-based weakening of food prices and the sharp decline in worldwide crude oil prices imparts a downward bias to the headline inflation trajectory going forward.

Individually, in petrol and diesel inflation was 1.57 per cent and 8.61 per cent, respectively, and for liquified petroleum gas (LPG) it was 6.87 per cent during December.

The inflation based on the Consumer Price Index (CPI) was 2.33 per cent in November and 5.21 per cent in December 2017.

Inflation in pulses stood at 2.11%, while in "egg, meat and fish" it was 4.55%.

The Reserve Bank of India (RBI) mainly takes into account retail inflation data while formulating monetary policy.

The 3.80% inflation is the lowest in eight months, and a lower inflation than this was last seen in April at 3.62%. The easing price pressures, together with moderating growth, may prompt a rethink on interest rates when the Monetary Policy Committee meets next month.

Other reports by Iphone Fresh

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