Retail inflation accelerated above the 6% mark to a seven-month high in January on the back of higher food and beverages prices, while wholesale price inflation eased marginally during the month but remained in double digits for 10th month in a row.
RBI governor Shaktikanta Das said 6% retail inflation should not surprise or create any alarm as the central had taken it into consideration. He said RBI had taken into consideration all possible scenarios of oil prices, while finalising inflation numbers. The hardening of global crude oil prices due to the situation in Ukraine has added an element of uncertainty to price pressures.
“So, at this point of time our inflation projections are quite robust and we stand by it. We have said the upside risk to these projections are the crude prices,” Das said at a press briefing after the central bank board meeting. “Price stability is definitely uppermost in mind and price stability basically means adhering to the inflation target,” the RBI governor said, and added that the deputy governor had explained that the character and content of inflation in advanced economies is different from character, content and drivers of inflation in India. Das said as far India is concerned, inflation momentum is on adownward slope and it is primarily the base effect, which has resulted in higher inflation.
The data released by the National Statistical Office showed inflation as measured by the consumer price index rose an annual 6%, higher than 5. 7% in previous month. The food price index rose 5. 4% in January, higher than 4. 1% in the previous month. Rural inflation was higher at 6. 1%, while urban inflation was at 5. 9%.
The gap between the two has narrowed as rural inflation has picked up. Retail inflation has marginally breached the upper band of the central bank’s tolerance level and it is the fourth consecutive month of increase in retail inflation.
Separate data showed, inflation measured by the wholesale price index eased to 13% in January from 13.6% in the previous month, largely driven by the low base effect and increase in food and nonfood items. Experts said the divergence between WPI and CPI remains significant, despite a moderation in wholesale WPI.
Experts expect the RBI to support growth, despite hardening price pressures and an increase in interest rate is not seen immediately.