Headline inflation moderated for the fourth consecutive month to touch a three-year-low in January, helped by a slower rise in fuel and manufactured goods price levels. The annual wholesale price index rose 6.62 per cent in January, the slowest pace since November 2009 and well below the 7.18 per cent year-on-year inflation rate clocked in December.
Inflation levels in case of food and primary articles continued to stay at elevated levels, at 11.88 per cent and 10.31 per cent respectively, while fuel inflation rose 7.06 per cent on an annual basis in January, up from December’s 9.38 per cent.
Manufacturing goods inflation dropped to 4.81 per cent from 5.04 per cent in January. Non-food manufactured inflation eased to 4.1 per cent during the month from 4.2 per cent in December.
Commenting on the inflation numbers, the chairman of the Prime Minister’s Economic Advisory Council (PMEAC), C Rangarajan, said price levels would further decline to 6.5 per cent by March end but asked the government to release more food stock to ease price situation. Planning Commission Deputy Chairman Montek Singh Ahluwalia said, “Inflation is still above the comfort level and it should come down further.”
Easing of inflation would provide the much-needed headroom for the RBI to lower policy rates going ahead. The RBI had projected March end inflation to be 6.8 per cent. Although, it is still above RBI’s comfort zone of 5-6 per cent, analysts said the decline in the January headline inflation and subdued growth in industrial output could prompt a rate cut, though concerns remain on the deficits front.
The Confederation of Indian Industry responded by saying there was a need to address the supply-side bottlenecks to increase availability of food stocks. The RBI is scheduled to come out with mid-quarter policy review on March 19.
“The mild moderation in core inflation, combined with the weaker-than-expected industrial performance in December 2012, boosts the likelihood of monetary easing in mid-quarter policy review in March,” ICRA senior economist Aditi Nayar said.
India’s gold demand dips by 12%
MUMBAI: The country’s gold demand dipped by 12 per cent in 2012 to 864.2 tonne, mainly on account