Moneycontrol Bureau
Inflation for January, as measured by a new methodology, has inched up to 5.11 percent year-on-year, compared to 4.28 percent (also on new methodology) in December. The index of industrial production (IIP) for December stood at 1.7%, compared to 3.9 percent.
At a press conference, officials of the Central Statistics Organisation (CSO) said it had changed the CPI base year from 2009-10 to 2011-12 as well as broadened the item basket, apart from making certain statistical changes to calculating the mean.
A CNBC-TV18 poll of economists had forecast consumer inflation at 5.3-5.8 percent but CSO chief statistician said, all things being equal, CPI would typically be 0.6 percent lower in the new series as compared to old series thanks to food weightage being lowered slightly (from 47.8 percent to 45.8 percent). “The change in weights reflects a change in consumption patterns,” he said.
The urban basket has 460 items now, compared to 450 earlier while the rural basket has moved up from 437 to 448, Anant said.
Breaking up the CPI data, food inflation stood at 6.13 percent, fuel & light inflation was at 3.74 percent while clothing and footwear was at 6.15 percent.
Core inflation, calculated by taking out volatile food and fuel prices, moved down to 3.9 percent from 5.2 percent.
Breaking up the CPI data, food inflation stood at 6.13 percent, fuel & light inflation was at 3.74 percent while clothing and footwear was at 6.15 percent.
“The important thing from the data is fall of core inflation below 4 percent. No one expected it and it is a positive surprise,” SBI chief economic advisor Soumya Kanti-Ghosh said.
Ghosh added that with the revision in the methodology/base, he expects inflation to stay lower at around 5.5 percent for the next few months. This, he said, could lead the RBI to cut its repo rate by 0.75 percent to 7 percent.
“Everybody was expecting the base effect to kick in [and push prices higher], which is not happening, prices are trending [lower],” former chief statistician said.
He added that the recent fall in wholesale inflation to 0 percent is now percolating down to the consumer level.
“I think the WPI is becoming a lead indicator. I think it is giving us a 2-3 months heads-up [over CPI]. So, you should look at what is happening to WPI,” he said.
IIP
For IIP, mining contracted while electricity growth slowed on the sector side. On the use side, consumer durables continued to show a contraction, while consumer non-durables continued to grow.
IIP internals:
- Mining Sector Output At -3.2% Vs 3.4% (MoM)- Manufacturing Sector Growth At 2.1% Vs 3% (MoM)- Electricity Sector Growth At 4.8% Vs 10% (MoM)
- Basic Goods Growth At 2.4% Vs 7% (MoM)- Capital Goods Growth At 4.1% Vs 6.5% (MoM)- Consumer Goods Growth At 0.7% Vs -2.2% (MoM)- Intermediate Goods Growth At 0.1% Vs 4.3% (MoM)- Consumer Durables Output At -9% Vs -14.5% (MoM)- Consumer Non-durables Growth At 5.7% Vs 6% (MoM)
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