CPI for Jan 2014 at a 3 Year Low of 8.1%

2 comments Written on March 12th, 2014 by
Categories: Inflation

Consumer Price Inflation for Feb 2013 is now at +8.1%.

imageThis is the lowest number since December 2011.

Both Urban and Rural inflation saw dips, and both are under 9%:

image

And then, there’s the components:

image

  • Food is down to +8.6% which is much lower than the 14% we’ve seen recently.
  • Fuel is down too, but I’m not entirely sure why because prices are significantly higher in rupee terms.
  • Costs of education and transport fell,
  • But Medical, Recreation and Clothing were up from the November figures.

Impact: This is good news, but this number needs to stay at this level. Much of the fall is due to the fall in food prices after a great harvest. It doesn’t look like March is getting more expensive on the food front, so for a few months we may have seen the end of high CPI Inflation.

There’s an RBI meeting on April 1.

There could be pressure on the RBI to reduce rates, given low IIPs numbers and inflation under some element of control. However, the RBI will be wary of cutting rates too early, and is unlikely to take drastic action. But we can be quite sure there will not be an increase in rates - so the worst case scenario is no-change and the best case is a cut of 0.25%.

Related Posts Plugin for WordPress, Blogger...

Tags:

About the Author:
http://www.capitalmind.in
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

2 comments “CPI for Jan 2014 at a 3 Year Low of 8.1%”

CPI is lowest since December 2011. If I remember correctly, this is the time Subbarao ended the tightening cycle & started cutting the rates. So you now see the link. A cut of 0.25% is thus a worse case scenario and no change would be a best case scenario!

Food prices goin up in Mumbai again … slowly but surely
and with untimely rains god knows how things will shape up in near future !