2015 inflation under check; kitchen staples beg to differ

When it comes to inflation, the year 2015 has shown that the macroeconomic datapoints may not always show the real picture and the cases in point relate to quite a few kitchen staples such as potato, onions and pulses. For records, the Consumer Price Inflation has remained well under control hovering in the range of 3.66-5.4 percent so far in 2014, while the industry chambers and some other experts are hopeful that it would keep below 6 percent mark in the New Year -- a target set by the Reserve Bank. However, the consumers saw an altogether different story in 2016 when they went to the shops to purchase some staple grocery and vegetable items for a good part of the year.

While onion prices again brought tears to the eyes of consumers, prices of tur dal touched record high levels above Rs 200 a kilogram. Another dataset, the Wholesale Price Index (WPI) based inflation in fact stayed in the negative zone for the entire year, meaning the wholesale prices actually fell and there was no inflation at all. While it entered the negative zone in November 2014, the WPI inflation stood at (-)3.8 percent in October 2015.

On the future datapoints, the industry chambers expect the prices to stabilise in the New Year although WPI may come back to the positive territory. "During 2016, prices are likely to stabilise as industries continue to operate below full capacity. With industrial prices no longer falling, WPI inflation is likely to rise to positive territory while CPI inflation will likely remain in a band of 5-5.5 percent, CII Director General Chandrajit Banerjee said.

"RBI's target of 6 percent by January 2016 will be easily met. In fact, inflation is likely to moderate from current levels as measures are taken to moderate the prices of pulses which had shot up on account of deficient rains", he added. International crude oil prices, which plunged to historic lows on a supply glut during the year, helped India reduce its oil imports bill and consequently commodities' transport cost.

RBI has however cautioned that while oil prices, barring geopolitical shocks, are expected to remain benign for a few more quarters, the uptick of CPI inflation excluding food and fuel for two months in succession warrants vigilance.