India’s January Retail Inflation at 5.10%: CPI Data India

India’s January Retail Inflation at 5.10%: CPI Data India

India’s retail inflation for January 2024 has eased to 5.10%, a significant decline attributed to slowing food price rises and favourable base effects, as per the latest official data released by the Ministry of Statistics and Programme Implementation. This marks a three-month low compared to the 5.69% recorded in December 2023.

Understanding the January CPI Inflation Figures, Consumer Price Index India

1. Overall CPI Movement

The Consumer Price Index India (CPI) inflation for January aligns closely with economists’ expectations, with prices rising by 5.10% year-on-year. This moderation is indicative of both short-term influences and the broader economic landscape.

2. Month-on-Month Changes

Breaking down the data, the month-on-month changes reveal a marginal decrease of 0.1% in the overall CPI index. This subtle shift underscores the intricate dynamics influencing inflationary trends in the Indian economy.

3. Food Inflation Dynamics

A significant contributor to the CPI basket, the food sector experienced an overall decline of 0.7%. Notable changes include a rise in cereals (0.8%) and meat, fish (0.9%), offset by decreases in edible oils (-14.96%), fruits (-2.0%), and vegetables (-4.2%). These nuances reflect the complexities of the food inflation landscape.

4. Sector-wise Contributions

Clothing, footwear, housing, fuel, light, and miscellaneous categories each witnessed moderate increases ranging from 0.2% to 0.4%. These sectors play integral roles in shaping overall consumer spending patterns, providing insights into economic activities.

Inflation Data India, CPI Data India

Prolonged Inflation Trends and RBI’s Medium-Term Target

Despite the decline in January, India’s headline retail inflation has now spent 52 consecutive months above the Reserve Bank of India’s (RBI) medium-term target of 4%. This sustained period above the target emphasizes the challenges faced by policymakers in maintaining price stability.

It’s noteworthy that the inflation rate has remained within the tolerance range of 2% to 6% for the fifth consecutive month, aligning with the RBI’s goal of balancing economic growth with price stability.

Industrial Output Growth in December 2023

In parallel, India’s industrial output, based on the Index of Industrial Production (IIP), grew by 3.8% in December 2023, according to separate official data. This marks a slight deceleration from the 6.4% growth recorded in November 2023.

Expert Insights and Future Projections, CPI Data India

Aditi Nayar, Chief Economist and Head of Research at ICRA, offers valuable insights into the CPI inflation. She notes the correction in food and beverage inflation due to favorable base effects and emphasizes the caution surrounding the outlook for the rabi harvest.

Projections suggest that CPI inflation is expected to ease below 5% in February-March 2024, averaging at 5.3% for the fiscal year 2023-24. The RBI’s projection of 5.4% for the same period aligns with these estimates.

Industrial Production Performance, CPI Data India

Despite a slowdown in core sector growth, the YoY growth in the IIP rose to 3.8% in December 2023, led by an improvement in the manufacturing sector. The use-based categories highlight an overall positive performance, with expectations of a modest rise in the IIP growth to 4-6% in January 2024.

In conclusion, India’s economic landscape reflects a delicate balance between inflationary pressures and industrial output growth. While the decline in January’s retail inflation brings temporary relief, ongoing challenges underscore the need for vigilant economic management.

Inflation Rate in India

India’s retail inflation dropped from 5.7% in December 2023 to 5.10% in January 2024, according to data released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).

FAQs about CPI Data India

1. How does the CPI inflation rate impact the average consumer?
   • The CPI inflation rate reflects the average change in prices paid by urban consumers for various goods and services. A higher inflation rate can lead to an increase in the cost of living, affecting consumers’ purchasing power.
2. What role does the Reserve Bank of India play in managing inflation?
   • The RBI aims to maintain price stability by setting inflation targets. It employs monetary policy tools to achieve these targets, influencing interest rates and liquidity in the financial system.
3. Why is food inflation a crucial component in the CPI basket?
   • Food inflation has a significant impact on overall CPI, as it constitutes a substantial portion of consumers’ expenditure. Fluctuations in food prices can influence inflationary trends and consumer sentiment.
4. What are base effects, and how do they impact inflation calculations?
   • Base effects refer to the impact of the previous year’s inflation rate on the current year’s calculations. Favorable base effects occur when the previous year had a higher inflation rate, contributing to a perceived slowdown in inflation.
5. How does industrial output growth contribute to economic health?
   • Industrial output growth, as measured by the IIP, is a key indicator of economic health. It reflects the performance of various sectors, indicating the overall strength and direction of industrial activities in the country.

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