CPI: Retail Inflation eases to 2.05% in Jan 2019; food, vegetables, fruits prices remain in deflation

In a major surprising development, the Consumer Price Index (CPI) or retail inflation has further eased down to 2.05% in latest January 2019 month. This is way lower compared to 2.11% recorded in December 2018 and 5.07% a year ago same month. The downward trend in CPI, is due to food inflation which has further widened its negative trend.

The Consumer Food Price Index (CFPI) is at -2.99% in January 2019 versus -2.65% in December 2018. CFPI was at 4.07% in January last year.

source: tradingeconomics.com

This month, eggs, vegetables, fruits saw deflation of -2.44%,-13.32% and -4.18%. With this, the index food and beverages posted -1.29% inflation rate. 

Other indicators like clothing & footware, housing, fuel & light and miscellaneous (involving Education, Personal care, tranport, healt, etc) recorded inflation rate of 2,95%, 5.20%, 2.20% and 2.05% respectively. 

In February 2019 policy, RBI has revised inflation target downward going forwarrd, with 2.8% in Q4:2018-19, 3.2-3.4% in H1:2019-20 and 3.9% in Q3:2019-20, with risks broadly balanced around the central trajectory.

CPI Inflation in January 2019, was lower than economist expectations. Nirmal Bang had predicted inflation numbers to come in at 2.43% YoY, although it was seen to edge up from 2.19% earlier. Food and beverage inflation were also expected to remain muted, declining 0.6% YoY, after a 1.5% decline in the previous month.