January WPI inflation eases to 10-month low of 2.76 percent

Wholesale food prices in January rose 1.84 percent year-on-year, compared with a 0.07 percent rise a month earlier,

India's annual wholesale price index (WPI) -bsed inflation eased to a 10-month low of 2.76 per cent in January, helped by a smaller increase in prices of manufactured goods and fuel products, government data showed on Thursday.

Annual wholesale price inflation last month was lower than a provisional 3.80 percent rise in December, and below a 3.65 percent increase forecast by economists in a Reuters poll.

Inflation in kitchen essentials like potato, onion, fruits, and milk softened in January over the previous month, the data revealed.

However, the rate of price rise in the food basket, as a whole, rose to 2.34 per cent in the month under review compared to a deflation (-0.07 per cent) in the previous month.

The retail inflation, released earlier this week, too declined marginally to 2.05 per cent in January over the previous month on continued decline in food prices, including vegetables and eggs.

The WPI data further revealed that wholesale based price inflation for 'fuel and power' segment fell sharply to 1.85 per cent as against 8.38 per cent in December 2018, due to easing in prices of motor fuel and LPG.

Also, there was decrease in inflation in manufactured products basket in spite of higher in some items like sugar and apparel.

The Reserve Bank, which mainly factors in retail inflation based Consumer Price Index (CPI), had cut the key lending rate by 0.25 per cent this month.

The decline in inflation may provide further head-room to the central bank to cut interest rate (repo) in coming months, experts said.