India Inflation


Inflation moderates in January

In December, the consumer price index for industrial workers (CPI-IW) added 1.65% over the previous month, amid a sharp increase in food prices. The figure tripled the 0.55% increase tallied in November, which lifted annual consumer price inflation from 8.3% in November to 9.5%. Meanwhile, the more recent and comprehensive wholesale price index (WPI), India's headline inflation measure, suggests that price pressures have yielded only moderately. In January, the WPI added 1.25% over the previous month, which was broadly unchanged from December's 1.26% price rise, but below market analyst expectations of a 1.50% climb. As a result, annual wholesale inflation inched down to 8.2% (December: 8.4%). According to Finance Minister Pranab Mukherjee, the decline in wholesale price inflation was ?too small to be comfortable.? The rise in the WPI reflected higher food prices, especially for vegetables (+14.9% month-on-month), which were boosted by a 36.6% increase in onion prices. Surging onion prices in December forced the government to take extraordinary measures, including the sale of subsidised agriculture products and a ban on onion exports. A rise in petrol prices also contributed to the monthly increase. Despite the relatively strong monthly figure, annual average wholesale prices inched down to 9.3%.


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