India Inflation


Inflation falls to eighth-month low

The wholesale price index (WPI) - India's preferred inflation measure - fell 0.17% over the previous month in January. The reading followed the 1.27% decreased observed in December and represented the second consecutive month of declining wholesale prices. January's decrease resulted primarily from a decline in prices for food, particularly for fruits and vegetables.

Wholesale prices increased 5.1% over the same month of the previous year, which came in below both the 6.2% rise observed in December and market expectations of a 5.8% increase. The annual reading represents the lowest rate in eight months. As a result of the fall in the annual figure, annual average WPI inflation inched down from December's 6.3% to 6.1% in January.

In addition, the consumer price index decreased 0.44% over the previous month in January, which followed the 1.00% fall recorded in December. Annual inflation fell from 9.9% in December to 8.8% in January, marking the lowest level since January 2012. January's annual reading also undershot market expectations of 9.2%.

FocusEconomics Consensus Forecast panelists expect wholesale price inflation to average 5.8% in fiscal year 2014/2015, which is unchanged from last month's forecast. In fiscal year 2015/2016, the panel expects wholesale price inflation to average 5.7%.

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India Inflation Chart

India Inflation January 2014

Note: Monthly and annual variation of wholesale price index in %.
Source: Reserve Bank of India (RBI) and FocusEconomics calculations.

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