Retail Inflation eases in January amid decline in vegetable prices

Retail inflation eased to 4.06 per cent in January 2021, due to decline in vegetable prices, according to government data released on Friday. The inflation based on Consumer Price Index (CPI) was 4.59 per cent in December 2020. The rate of price rise in the food basket was 1.89 per cent in January, significantly down from 3.41 per cent in December, revealed the data released by the National Statistical Office (NSO). Analysts in a Reuters poll had predicted an annual inflation at 4.45 per cent for the month.

The number is within the Reserve Bank of India's comfort zone of 2 per cent to 6 per cent. The numbers were above the RBI's target zone for eight months from April 2020 despite demand slowdown due to the Covid-19 pandemic. In January 2021, food inflation dipped sharply on a sequential basis to 1.89 per cent compared with 3.41 per cent in December 2020, according to Ministry of Statistics and Program Implementation (MoSPI) on Friday. The Index of Industrial Production (IIP), which measures industry activity, in December 2020 grew 1 per cent compared with an expansion of 1.9 per cent in November 2020.