The annual consumer price index (CPI) of India has hit 7.65 per cent for January compared over a year ago, hinting efforts to moderate prices are working. Albeit higher than wholesale price index (WPI), the latest CPI likewise suggests a rate cut by the central bank might not occur sometime soon.
Data last week released by the Central Statistics Office showed the WPI, India's long main inflation gauge, slowed down to 6.55 per cent year on year in January, the country's slowest since November 2009.
The new CPI data, released on Tuesday for the first time this year, captures price movements in the services sector, which account for 55 per cent of India's economy. The new CPI data was launched early last year and will gradually displace WPI data as the primary indicator of inflationary trends in India.
"Initially, the RBI may continue to look at both the WPI and CPI data for monitoring inflation," N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy, said in Reuters News. "But once the robustness of the CPI is established, it would become a better indicator."
The January CPI in rural areas, according to the Central Statistics Office, stood at 7.38 per cent while it was 8.25 per cent at the urban areas. The office said that it would release CPI data every month for rural, urban and combined.
Just last month, the Reserve Bank of India said it already mulls cutting rates in order to promote economic growth. India expects its economic growth to fall below 7 per cent in the fiscal year to end-March, its slowest since the 2008 financial crisis.
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