Inflation in January declined to ~6.6% YoY from 7.2% versus the ~7.0% expectation. It was the lowest since December 2009. Importantly,
manufacturing inflation eased for the fourth straight month, slipping below 5% after a long time. In fact, seen on MoM 3MMA, SA basis,
manufacturing inflation turned negative, suggesting inflation pressures in the economy are receding sharply. Slowing sequential momentum in CPI only corroborates this assessment. Meanwhile, fuel inflation declined despite sharp rise in bulk diesel prices on account of high base effect.
Food inflation dips marginally
Inflation in primary articles, mainly agri products, fell to ~10.3% YoY in January as against the previous month’s ~10.6%. This was mainly due to the decline in non‐agri primary articles inflation (mainly fibres). Meanwhile, food articles inflation rose to ~11.9% YoY in January compared to 11.2% last month due to rise in the prices of onions and protein related items.
