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Inflation eases to 5-year low of 3.17% in January

Retail inflation eased to 3.17 percent in January, its lowest level in at least five years.

 

 

Inflation eases to 5-year low of 3.17% in January

New Delhi: Retail inflation eased to 3.17 percent in January, its lowest level in at least five years.

According to data released by the Central Statistics Office (CSO), the fall in retail inflation was mainly due to a drop in the annual food inflation.

Food inflation stood at 0.53 percent last month, lower than 1.37 percent in December.

The Consumer Price Index-based inflation was at 5.69 percent in January last year.

Headline inflation has been under 4 percent since November, well below the RBI's 5 percent target for March and medium-term target of 4 percent.

Low inflation led many to believe the central bank would cut the repo rate last week. But a pick-up in global crude prices, a volatile foreign exchange market, and relatively high domestic non-food and non-fuel inflation have fuelled concerns among RBI officials.

Last week, the RBI shocked investors by holding at 6.25 percent and shifting its monetary policy stance to "neutral" from "accommodative".

RBI has projected retail inflation in the range of 4 to 4.5 percent in the first half of 2017-18 fiscal and between 4.5 percent to 5 percent in the second half.

The monetary policy committee said it is "committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner" and this requires further "significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky.

"The committee decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out," the resolution of the Monetary Policy Committee said.

With Agency Inputs

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