India retail inflation unexpectedly eases to 19-month-low on falling food prices

Consumer prices rose 2.05% in January from a year earlier, the Statistics Ministry said in a statement on Tuesday.

Feb 12, 2019 12:02 IST India Infoline News Service

India’s retail inflation eased to a 19-month low, helping justify the central bank’s decision to lower interest rates to stoke economic growth.

Consumer prices rose 2.05% in January from a year earlier, the Statistics Ministry said in a statement on Tuesday. That compares with the 2.5% median estimate in a Bloomberg survey of 38 economists and well within the Reserve Bank of India’s 2.8% projection for January to March.

Key Insights

Benign inflation, along with indicators pointing to slowing economic activity, will keep the pressure on the RBI to lower interest rates further after it unexpectedly eased last week.

Citing a sharp slide in consumer prices as the reason for the cut, the RBI under new Governor Shaktikanta Das lowered its inflation projection to 2.8% for the last quarter of the current fiscal year ending March.

India isn’t the only country where inflation has turned sluggish, with consumer prices easing across Asia and other major economies. The US and China are set to publish price data that are set to endorse the decision of central banks to steer away from tighter monetary policy.

India’s central bank will release the minutes of its monetary policy meeting on February 21

In Numbers
  • Consumer food price inflation fell 2.17%.
  • Fuel and light prices rose 2.2%.
  • Housing prices rose 5.2%.
  • Clothing and footwear prices rose 2.95%.
  • Food and beverage prices fell 1.29%.
  • India’s factory output rose 2.4% in December, faster than the revised 0.3% gain in the previous month, figures released separately by the government showed.

Source: Bloomberg

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