India Inflation January 2019

India: Consumer price inflation slows in January to an over one-year low

In January, consumer prices fell 0.29% compared to the previous month, which is less than the revised 0.50% fall in December (previously reported: -0.49% month-on-month). Weighing on prices in January were lower prices for food and beverages, clothing and footwear, and fuel and light. On the other hand, prices rose for pan, tobacco and intoxicants; housing; and miscellaneous products.

Consumer price inflation ticked down to 2.0% in January from a revised 2.1% in December (previously reported: 2.2%). This result was way down on market analysts’ expectations of 2.5%, represents the lowest reading since June 2017 and suggests the Reserve Bank of India could have room to reduce interest rates again at its next meeting on 2–4 April after raising them on 7 February. Core inflation, which excludes food and energy products, slowed to 5.4% in January from 5.6% in December. Annual average inflation slowed to 3.7% in January from 4.0% in December.

Wholesale prices fell 0.7% in January compared to the previous month, a smaller decrease than December’s revised 1.3% fall (previously reported: -1.4% month-on-month). Lower prices in January came on the back of cheaper fuel and light. Wholesale prices inflation slowed to 2.8% in January, which represents a 10-month low and a rate far below market analysts’ expectations of 3.7%. Annual average wholesale price inflation held steady at December’s 4.3% in January.

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