Published: Wed, February 13, 2019
Finance | By Loren Pratt

Consumer Inflation At 2.05% In January, Lowest Since June 2017

Consumer Inflation At 2.05% In January, Lowest Since June 2017

On a month-on-month basis, however, the industrial growth as measured by the Index of Industrial Production (IIP), increased from 0.3 per cent in November.

The consumer price inflation (CPI) for the month of January further declined to 2.05 per cent on the back of drop in food prices and smaller increases in fuel costs.

Factory output growth in the previous month was revised downwards to 0.3 per cent, from 0.5 per cent previously.

The Retail Prices Index (RPI), a separate measure of inflation, was 2.5 per cent, down from 2.7 per cent in December.

Figures released separately on Tuesday showed industrial output growth rose 2.4 percent in December on the year. Capital goods output, which is a proxy for investment demand, remained volatile growing 5.9 per cent in December as against 13.2 per cent in the corresponding period year ago, but was higher than contraction of 3.1 per cent a month ago.

India's economy is slowing, hit by reduced growth in consumer spending and in the farm sector.

Inflation was pulled lower by a decline in electricity, gas and other fuel prices between December and January, which was partially offset by lower air fares.


The CPI including owner-occupiers' housing costs (CPIH) - the ONS's preferred measure of inflation - was 1.8 per cent in January, down from 2 per cent in December.

Consumer inflation had stood at 1.46 per cent in June 2017.

The "food and beverages" segment registered a deflation of 1.29 per cent in January as against 1.49 per cent deflation a month ago.

It is the first time since January 2017 the pace of price rises is below the official Bank of England target of 2 per cent.

Core consumer inflation, which strips out food and fuel prices, was estimated at about 5.4 percent in January, slightly softer than a downward revised December figure of 5.6 percent, according to an estimate made by two analysts from inflation figures released on Tuesday.

The retail inflation number was much lower than the market expectations, said Tushar Arora, a senior economist at HDFC Bank. However, the conundrum of sharp spikes in rural health and education prices still remains and requires watching.

Viral Acharya, the RBI's deputy governor in charge of monetary policy who was among those who sought to keep rates unchanged, has in the past pointed to core inflation as being a more reliable indicator.

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