The lower inflation numbers will be good news for the Congress-led UPA government ahead of the general election due by May. Photo: Bloomberg
New Delhi: India's wholesale price index (WPI)-based inflation eased significanlty to an eight-month low of 5.05% in January, from 6.16% in December, bringing relief to policymakers battling high inflation and low growth.
Data released by the commerce ministry on Friday showed that WPI inflation eased for the second straight month mainly due to falling food prices, especially vegetables. Fuel prices also eased marginally, the data showed.
With retail inflation also easing, the new data will likely provide policy space for the Reserve Bank of India (RBI), though analysts expect it to mainitain a status quo on rates in the next monetary policy review.
The lower inflation numbers will be good news for the Congress-led United Progressive Alliance (UPA) government ahead of the general election due by May. The Congress has acknowledged that high inflation could have been a reason for its poor showing in assembly elections to four states held in November last year.
Data released on Wednesday had shown that retail inflation also eased to a two-year low of 8.79% in January, from 9.87% the preceding month. RBI, which is now looking to target retail inflation levels, is aiming to bring down retail inflation to 8% by January 2015 and 6% by January 2016, as per the recommendations of the Urjit Patel committee.
However, manufacturing output continued to contract with the index of industrial production falling 0.6% in December.
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