After 7 months, inflation cools down to 5.05%

Wholesale inflation eased to a seven-month low of 5.05 per cent in January, on decline in the rate of price rise in food articles, mainly vegetables.

This is the second straight month of decline in wholesale price based inflation.

The WPI was at 6.16 per cent in December.

During January, inflation in food articles came down sharply to 8.80 per cent as against 13.68 per cent in the preceding month, according to the Wholesale Price Index (WPI) data released on Friday.

Vegetables inflation came down sharply to 16.60 per cent, compared to 57.33 per cent in December.

The rate of price rise in onion eased to 6.59 per cent in January, from 39.56 per cent in December. Inflation in potato stood at 21.73 per cent in January.

Fruits were cheaper as were protein-rich items such as eggs, meat and fish. However, inflation in milk inched up slightly to 7.22

per cent in January.

Data released earlier this week showed that retail inflation declined to a 2-year low of 8.79 per cent in January, while industrial output contracted by 0.6 per cent in December.

The decline in inflation is much on the expected lines of the Reserve Bank, which had hiked key interest rates by 0.25 per cent in its monetary policy review last month.

The Reserve Bank factors both retail and wholesale price based inflation data in its monetary policy.

There have been demands from various quarters that the RBI should look at relaxing interest rates as inflation was showing signs of easing and slowdown persisted in industrial output.

According to the WPI data, inflation in primary articles basket and the fuel and power segment was at 6.84 per cent and 10.03 per cent, respectively.

Inflation in manufactured products such as sugar and edible oils was up marginally at 2.76 per cent on a monthly basis.