India’s retail inflation eased further in January while the Index of Industrial Production (IIP) rebounded, giving ample space to the Reserve Bank of India to reduce key interest rates and give a further push to economic growth, government data showed on Friday.
Retail inflation slowed to a sixteen-month low of 4.06 percent in January mainly on account of softening of food and vegetable prices. It is for the second consecutive month that retail inflation based on the Consumer Price Index (CPI) has remained within the target range of RBI which is 4 percent (+/-2 percent). The retail inflation stood at 4.59 percent in December 2020 and 7.59 percent in January 2020.
The previous low for retail inflation was in September 2019 at 4 percent. The rate of price rise in the food basket was 1.89 percent in January this year, significantly down from 3.41 percent in December, revealed the data released by the National Statistical Office (NSO). "Driven by a fairly broad-based moderation in the food inflation, the CPI inflation in January 2021 softened appreciably to a 16-month low... "Food prices have displayed a mixed trend so far in February 2021.
The rise in onion prices, as well as higher crude oil prices and their transmission into retail fuel prices, are areas of concern that need to be monitored," said Aditi Nayar, principal economist, ICRA. Vegetable prices showed further decline during the month with a negative inflation print of 15.84 percent.
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