India Inflation Eases More Than Expected; Slowest on Recordby
India’s inflation grew at its slowest pace on record even as the central bank unexpectedly held interest rates in its monetary policy review last week.
- Consumer prices rose 3.17 percent in January from a year earlier, the Statistics Ministry said in a statement in New Delhi on Monday
- That’s slower than the 3.24 percent median estimate in a Bloomberg survey of 32 economists
- Food prices rose 0.53 percent compared with a 1.37 percent increase the previous month
- Today’s number was below the 3.27 percent rate recorded in Nov. 2014
Governor Urjit Patel kept the benchmark repurchase rate unchanged at a six-year low of 6.25 percent for a second straight meeting last week and signaled that its interest-rate easing cycle is coming to an end. However, the central bank forecast a sharp recovery in growth during the year through March 2018, helped by a rebound in consumption that has been hurt by Prime Minister Narendra Modi’s unprecedented cash ban.
“Although food prices falling is partly seasonal, there seems to be the added effect of distress sales after demonetization,” said Sonal Varma, chief economist, Nomura Holdings Inc. “There is a risk of reversal as the effects of demonetization dissipate. There could be a rise incrementally going forward.”
- Food and beverage prices rose 1.29 percent
- Fuel and lighting rose 3.42 percent
- Clothing and footwear rose 4.71 percent