India: Inflation rises in January, while fall in wholesale prices steepens

Consumer prices in January increased 0.16% over the previous month, which contrasted December’s 0.40% fall. The monthly jump partly reflected an increase in prices of clothing and footwear as well as housing. Inflation picked up pace in January, rising from 5.6% in December to 5.7%, which marked the highest rate since August 2014. The result overshot market analysts’ expectations of 5.4% inflation.

The wholesale price index (WPI) in January fell 0.96% over the previous month, which contrasted December’s 0.06% decrease. January’s reading reflected falling prices for food as well as for fuel and power products. On an annual basis, wholesale prices fell 0.9% in January, which was a softer decline than December’s 0.7% drop. However, the trend stabilized and annual average WPI inflation remained at December’s minus 2.7%.

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 5.0% in FY 2015, which is unchanged from last month’s forecast. In FY 2016, the panel expects consumer price inflation to average 5.3%. Panelists expect wholesale prices to fall 2.1% in FY 2015, which is unchanged from last month’s forecast. In FY 2016, the panel expects wholesale price inflation to average 2.4%.