New Delhi, Feb 12 (IANS) A slight easing in food prices helped lower India’s retail inflation in the New Year although it remained above the five per cent mark at 5.07 per cent in January compared to 5.21 per cent in December 2017, according to data released by the Central Statistics Office on Monday.
On a year-on-year (YoY) basis, the consumer price index (CPI) last month was at a much higher level than the 3.17 per cent in January 2017.
The consumer food price index (CFPI) in January stood at 4.58 per cent compared to 4.85 per cent in December 2017.
Last week, the Reserve Bank of India (RBI) kept its key interest rate unchanged at 6 per cent for the third time in succession at its final bi-monthly monetary policy review of the fiscal, citing upside risks for inflation from rising global crude oil prices and other domestic factors.
The RBI said its decision to keep its repo, or short term lending rate for commercial banks, unchanged is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4 per cent.
“We expect headline inflation to be at 5.1 per cent in the fourth quarter (January-March), including the impact of HRA (house rent allowance) to central employees, up from the 4.6 per cent in Q3,” RBI Governor Urjit Patel told reporters here after release of the monetary policy review.
However, the fact that the central bank did not raise the repo rate in the face of hardening inflation as recommended by one of the six monetary policy committee (MPC) members is being considered as its attempt to aid in economic recovery.
Presenting his last full budget earlier this month before the general elections next year, Finance Minister Arun Jaitley made a significant announcement of fiscal slippage with implications for pushing inflation, revising upwards the government’s fiscal deficit target for 2017-18 to 3.5 per cent of the GDP, or the equivalent of Rs 5.95 lakh crore.
The higher target came in place of the 3.2 per cent — or Rs 5.46 lakh crore — for the current fiscal announced earlier.