Retail inflation drops to multi-year low in January

 The country’s retail inflation marked a sharp drop to 3.17% in January, on the back of fall in prices of vegetables and pulses.

But the core CPI (consumer price index)  remained high, raising doubts on whether the Reserve Bank of India will oblige with any more interest rate cuts.

Data released by the Central Statistics Office showed food inflation fell to 0.53% in January 2017, from 1.37% in December 2016. Prices of vegetables and pulses dropped 15.62% and 6.62%, respectively.

Experts said, demand slowdown due to demonetisation could be one of the factors behind the fall in inflation.

During the Budget debate in the Parliament, Finance Minister Arun Jiatley too had said that the demand for perishables had been affected due to demonetisation.

In its monetary policy statement last week, the RBI had said, excluding food and fuel, inflation has been unyielding at 4.9% since September.

“While some part of this inertial behaviour is attributable to the turnaround in international crude prices since October, which fed into prices of petrol and diesel embedded in transport and communication, a broad-based stickiness is discernible in inflation, particularly in housing, health, education, personal care and effects (excluding gold and silver) as well as miscellaneous goods and services consumed by households,” the RBI said.

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