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Inflation eases in India, wholesale price inflation spikes

Staff Writer |
In January, consumer prices in India fell 0.08% from the previous month, which was a smaller drop than December’s 0.61% decrease.

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he subdued drop came on the back of lower prices for food and beverages, while prices for tobacco and intoxicants, housing, and fuel and light all rose compared to the previous month.

Inflation continued to fall in January, declining from December’s 3.4% to a multi-year low of 3.2%.

As a result, inflation is below the Central Bank’s target of 5.0% for Q4 FY 2016 and lies below the center of its medium term target of 4.0% plus/minus 2.0 percentage points.

The wholesale price index (WPI) in January rose 0.98% from the previous month, contrasting December’s 0.38% fall. The rise in the index was driven by a jump in prices for fuel and power.

In addition, prices for manufactured products rose mildly. Wholesale price inflation rose to 5.3% in January from 3.4% in December, the highest rate since August 2014.

Higher commodity prices have accelerated wholesale price pressures in recent months.

As a result, the trend pointed upward and annual average wholesale inflation rose to 2.5% in January from 2.0% in December.

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 4.9% in FY 2016, which is unchanged from last month’s forecast.

In FY 2017, the panel expects consumer price inflation to average 5.0%, which is also unchanged from the previous month’s forecast.

Panelists expect wholesale price inflation of 2.4% in FY 2016, which is down 0.5 percentage points from last month’s forecast.

In FY 2017, the panel expects wholesale price inflation to average 3.9%, which is unchanged from the previous month’s projection.


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