January wholesale inflation quickens on fuel, manufactured products

Epoch Times

While, unexpectedly IIP has contracted to 0.3 per cent in December from 1.8 per cent in November. Consumer Price Index inflation stood at 7.59% in January 2020, compared to 7.35% in December 2019, according to data released by the Ministry of Statistics and Program Implementation on Wednesday.

Manufacturing sector output declined by 1.2% compared to growth of 2.9% in the same month a year ago. Data showed the rate of inflation of the vegetable group at 50.19 per cent in January, against 60.5 in December.

Consumer durables and non-durables recorded growth of (-) 6.7 percent and (-) 3.7 percent respectively. Inflation in food and beverages stood at 11.8% as compared to 12.16% in December 2019.

Industrial output, or factory output, is the closest approximation for measuring the economic activity of the country's business landscape. Experts feel that with vegetable prices, especially that of onion, potato and garlic, coming down sharply, there will be some impact on the overall rate of inflation in the coming months.

The Consumer Price Index (CPI)-based retail inflation was 7.35 percent in December 2019 and 1.97 percent in January previous year.

The inflation in primary articles, which have a weightage of 22.62 percent, came in at 10.01 percent for January, against 11.46 percent in December.

Vegetables (including onion) and pulses still contribute in a big way to the rise in inflation, though the rate of inflation of the former did come come down slightly.


India's Industrial production dipped to 0.3 percent in December 2019 against 2.5 percent in the year-ago month on a poor show by the manufacturing sector.

The uptick in inflation figures came on the back of sharp increase in food prices.

Housing turned costlier by 4.20 percent in January 2020, while for fuel and light, the inflation print was 3.66 percent.

The last time the inflation rate were higher than this was in May 2014, when retail inflation stood at 8.33%.

"Moreover, the fairly broad-based rise in the core inflation to 4.1 per cent in January 2020, driven by various services, is a cause for concern", said Aditi Nayar, principal economist, ICRA.

This is the second straight month in which retail inflation has breached the upper-end of the Reserve Bank of India's (RBI) comfort level of 2%-6%. The central bank had kept its repo rate unchanged at 5.15% last week, despite slowing growth, and revised up its inflation projections, estimating it would range between 5.0% and 5.4% in the first half of the upcoming fiscal year.

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