January CPI Data: India's Retail Inflation Eases To Five-Month Low At 4.31%; Food Inflation Moderates

India's retail inflation moderated to a five-month low in January, led by lower vegetable prices.

India's Consumer Price Index-based inflation moderated to 4.31% in January from 5.22% in December, according to data from the Ministry of Statistics and Programme Implementation on Wednesday. Food and beverage inflation eased to 5.68% in January from 7.7% in December. This was led by vegetable prices further cooling to 11.35% compared to 25.6% in the same duration.

India's core inflation, which excludes volatile food and fuel components, rose by 3.74% in January, as per Bloomberg, compared to 3.64% in December.

A Bloomberg poll of economists had pegged the median inflation estimate at 4.5% for January. For the ongoing quarter, the RBI projects inflation at 4.4%.

January CPI inflation moderated sharper than expected, led by significant easing of food prices, Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said. "Overall, we expect the inflation trajectory to remain benign in the months ahead to provide room for another 25 basis points of rate cut by the Monetary Policy Committee," she said. However, the pace of INR depreciation will need to be closely watched for spillovers on domestic inflation, she added.

Key Internals (Year-On-Year)

• Cereal prices rose by 6.24% after rising by 6.5% in December.

• Inflation for meat and fish was 5.25% compared to a rise of 5.3% in the previous month.

• Inflation in eggs rose 1.27% after rising by 6.9% last month.

• The inflation rate for milk and milk products was 2.85% as compared to 2.8% in the previous month.

• Inflation in pulses rose 2.59% after rising by 3.8% last month.

• Clothing and footwear inflation rose to 2.68%, compared to 2.7% in the previous month.

• Housing prices went up by 2.76%, compared to 2.7% last month.