India’s January CPI inflation declines to 5.10%, core inflation falls to 3.6% | Top Vip News

India’s overall retail inflation rate slowed to a three-month low of 5.10 percent in January, according to data released by the Ministry of Statistics and Program Implementation on February 12.

Consumer Price Index (CPI) inflation in December 2023 was 5.69 percent.

The latest CPI inflation figure of 5.10 percent is in line with expectations, and economists had forecast prices would likely rise 5.09 percent year-on-year in the first month of 2024.

While headline retail inflation cooled in January, it has now been above the Reserve Bank of India’s (RBI) medium-term target of 4 per cent for 52 consecutive months. However, inflation has now been within the tolerance range of 2 to 6 percent for the fifth consecutive month.

The fall in inflation in January was driven by weaker price momentum – indicated by the month-on-month change in prices – for food, with the food consumer price index down 0.7 percent from December 2023 Within food, the price index for vegetables was down 4.2 percent month-on-month (MoM), while fruits were down 2.0 percent.

Among the increases within food items are eggs (3.5 percent) and cereals and products (0.8 percent). Overall, food inflation fell to 8.30 percent from 9.53 percent in December 2023.

According to Madhavi Arora, chief economist at Emkay Global Financial Services, vegetable inflation has remained high as the month-on-month fall in prices was less than the usual seasonal behaviour.

“Factors such as delayed sowing due to erratic monsoon and consequent delay in kharif harvest have been preventing further correction in its prices. The truckers’ strike earlier in the month may also have contributed to the supply disruption of fruits and vegetables,” Arora added.

Apart from food products, the month-on-month price increase was modest, with price indices for housing, fuel and electricity, clothing and footwear and other categories increasing by 0.2 to 0.4 percent .

As a result, core inflation – or inflation excluding food and fuel – fell further to 3.6 percent from 3.9 percent in the last month of 2023.

The latest inflation data comes days after the RBI’s Monetary Policy Committee left the repo rate unchanged at 6.5 per cent for the sixth consecutive meeting. According to the central bank’s latest forecast, CPI inflation is forecast at 5.0 percent in the current quarter before declining to 4.0 percent in July-September. However, it is projected to rise to 4.7 percent in the first quarter of 2025.

“Given that the RBI has declared the risk of food inflation translating into broad-based inflation, we expect the RBI to maintain a cautious stance,” said Akhil Mittal, senior fixed income fund manager at Tata Mutual Fund.

“However, the weakening in core inflation should provide confidence that the inflation path is moving as expected… We do not see premature easing by the RBI. We believe the RBI would prefer to ease or indicate easing only when “are confident of achieving the inflation target on a lasting basis. We believe that the second half of 2024-25 could open room for flexibility,” Mittal added.