India’s CPI Inflation And Core Inflation Eases
The Consumer Price Index (CPI) Inflation for January stands at 5.10 percent, which is a roll down from last December and last January, the report released by the Ministry of Statistics and Programme Implementation says. The CPI Inflation for the month of December 2023 stood at 5. 69 percent and for January 2023 was at 6.52 percent. This has been linked to the ease in the prices of food, as per the ministry.
The inflation target has come under the bracket of the tolerance level for five months straight, with the numbers staying between two percent to six percent. The eased inflation level has now stayed for fifty-two consecutive months above four percent, which has been the medium target of the Reserve Bank of India (RBI).
The easing of the inflation digits is said to be the outcome of a weaker momentum in price, arising from the month-on-month price changes in items of food. Among items of food, the vegetable price index was down by 4.2 percent month-on-month and that of fruits was down by 2.0 percent. The rise in food items were seen in the case of eggs by 3.5 percent and that of cereals and products by 0.8 percent. Looking at food inflation as a whole, the numbers have come down to 8.30 percent from December 2023’s 9.53 percent.
The lead economist at Emkay Global Financial Services, Madhavi Arora says that, the vegetable prices has been left high because of the month-on month price fall is lower than the normal seasonal behaviour, reported moneycontrol. She added that, “Factors like delayed sowing amid patchy monsoons and consequent delayed kharif harvest have been impeding a higher correction in their prices. The truckers” strike earlier in the month may have also contributed to the disruption to supply of fruits and vegetables.”
Keeping food items apart, the price rise was seen in a modest manner in housing, fuel and light, clothing and footwear and miscellaneous categories by 0.2 to 0.4 percent. This, further had led the core inflation, which is the inflation, keeping food and fuel apart, fall to 3.6 percent from December 2023’s 3.9 percent.
The latest, eased and improved numbers come in after RBI kept its policy repo rate unchanged at 6.5 percent for the sixth time straight. Senior Fund Manager-Fixed Income at Tata Asset Management, Akhil Mittal says that, “with RBI stating risk of food inflation translating into generalised inflation, we expect RBI to continue cautious stance,” and that, “however, softening of core inflation should provide confidence to trajectory of inflation moving as expected… We do not see premature easing from RBI. We think RBI would rather ease or indicate easing only when they are sure of achieving inflation target durably. We believe second half of 2024-25 could open space for easing,” reported the mint.
