Retail inflation in January 2024 eases to 5.10% on slower food price growth

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CPI Inflation has dropped for the second month in a row to 5.10 per cent in January 2024. Inflation has now fallen to three-month low levels. Rural inflation has fallen to 5.34 per cent. While, urban inflation has  corrected to 4.92 per cent. Inflation has remained lower than RBI’s upper limit of tolerance band of six per cent for last five straight months now.

January inflation print has corrected on the back of slowdown in food item prices growth.  January 2024 CPI Inflation also eased a bit on the back of low milk inflation which fell to 4.64 per cent. Pulses and products inflation after remaining high last year, eased a bit to 19.54 per cent in January2024. Pulses and products inflation remain at very high levels.

Spices inflation has also remained in double digits in last one year. Although, in January 2024, CPI Inflation print for spices fell to 16.36 per cent.

Similarly, cereals and products inflation after being a headache for government for quite a long time, has finally started to show correction off-late. It has now continuously fallen since August 2024. Cereals and products inflation fell for sixth straight month in Januray 2024 to 7.83 per cent.

Fruits inflation after increasing continuously from June 2023 to December 2023, finally showed some correction last month as it fell to 8.65 per cent.

On the back of subdued international crude oil prices, fuel and ligh inflation came in negative territory at (-) 0.60 per cent in January 2024.

Personal care and effects inflation also fell to 5.94 per cent.

Veggie prices had risen sharply during the monsoon season which registered six per cent lower rainfall on year-on-year basis. But, as a result of steps taken by the Government of India (GoI), veggie prices especially of onion and tomato have seen a sharp correction after that. In January 2024, food inflation fell to 7.58 per cent. Prices of onion and tomato have shown correction in last few months, but prices still remain higher than an year ago.

Vegetables inflation still remain at worrysome levels of 27.03 per cent in January 2024.

The RBI governor in recently concluded MPC meet had said that going forward whether inflation will be high or low it will depend on food prices. He had said “large and repetitive food price shocks” can be one of the biggest threat to ongoing disinflationary trend.

In last few months, government has been able to keep inflation under control because of recent corrections in food item prices.

Bad news for non-vegetarians:

Meat and fish inflation had largely remained muted in 2023. But in the first month of the new year, meat and fish inflation showed signs of pick and increased to 1.19 per cent. Egg inflation also increased to 5.60 per cent.