Inflation slips to (-)0.9% in Jan; stays negative for 15 mths

Deflationary pressure persisted for the 15th month in a row as inflation at the wholesale level slipped to (-)0.9 per cent in January with some food articles turning less expensive.
Although in the negative zone since November 2014, it had started showing a rising trend in the past four months - from last September.
The Wholesale Price Index-based inflation was (-)0.73 per cent in December. In January 2015, it was (-)0.95 per cent.
As per the official data released today, food inflation stood at 6.02 per cent in January as against 8.17 per cent in December.
Expressing concern over continued deflationary pressure, industry body Ficci said government should increase public spending in the forthcoming budget to boost demand.

"The government should not shy away from recalibrating the fiscal deficit target in order to push public investments with a view to add productive capacity to the economy," Ficci said.

According to official data, inflation in pulses and onion eased to 44.91 per cent and 5.51 per cent respectively. The rate of price rise in the case of vegetables was 12.52 per cent in January and for fruits, it stood at (-)2.32 per cent.
In case of potato, it was (-)17.08 per cent while for eggs, meat and fish came in at 5.69 per cent.
The inflation print in the fuel and power segment was (-)9.21 per cent and for manufactured products, it read (-)1.17 per cent in January.

The November WPI inflation has been revised to (-)2.04 per cent from the provisional estimate of (-)1.99 per cent.
Assocham demanded that Reserve Bank cut its benchmark interest rate in the next bi-monthly monetary policy since inflation as targeted by the apex bank is well within the range, creating a room for further rate cut to support demand.
RBI is slated to come out with the first bi-monthly policy review for 2016-17 fiscal on April 5 and will take into consideration inflationary trends and also the data for February before deciding the monetary stance.
The central bank looks into mainly retail inflation data, based on Consumer Price Index (CPI), while firming up its monetary policy stance.

As per the data released last week, retail inflation has been rising for six straight months and stood at nearly one and a half-year high of 5.69 per cent in January.
The Reserve Bank had projected retail inflation to be around 6 per cent in January 2016 and lower further to 5 per cent by March 2017.
ICRA Senior Economist Aditi Nayar said the January WPI inflation is in line with expectations. "We anticipate that WPI inflation will print a tad below zero in February 2016 barring a sizable uptick in crude oil prices in the remainder of this month".

Although food prices have reported some moderation, Ficci said "in order to keep it under check going ahead, we do hope the Government will continue to take measures to manage supply side situation".
RBI also takes into account industrial production numbers. As per the latest data, Index of Industrial Production (IIP) contracted 1.3 per cent in December as against a decline of 3.4 per cent in November.