Retail inflation dips further to 2.05% in January, lowest in 19 months

CPI Inflation Eases Further To 2% On Falling Food Prices

Retail inflation eases to 2.05% in January

A vendor sleeps as his son waits for customers at their roadside vegetable shop in New Delhi, February 12, 2019. As well as the sharp decline in energy prices, Whitehall statisticians said the drop in inflation was also fuelled by lower petrol prices and a decline in the cost of hotel rooms. January's data is an indication that inflation, which is little over 2 percent, is very close to the central bank's lower tolerance level of inflation at 2 percent.

Retail inflation continued to slide, easing to a 19-month low of 2.05 per cent in January, with food inflation continuing to remain in the negative zone, separate set of data released on Tuesday showed.

Figures released separately on Tuesday showed industrial output growth rose 2.4 percent in December on the year.

"The further falling back in inflation facilitates the Bank of England maintaining a "wait and see" approach on interest rates until after the United Kingdom leaves the EU", Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

It is the first time since January 2017 the pace of price rises is below the official Bank of England target of 2 per cent.

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"This reinforces expectations of a rate cut in April", he added.

Despite the fall in inflation since late 2017 and the fastest wage growth in a decade, businesses have reported a downturn in consumer spending in recent months.

India's economy is slowing, hit by reduced growth in consumer spending and in the farm sector. "This has opened up space for policy action", RBI Governor Shaktikanta Das said last week. Consumer inflation - determined by Consumer Price Index (CPI) - indicates the rate of increase in consumer prices.

Retail food prices fell 2.17 percent in January from a year earlier, compared to revised fall of 2.65 percent a month earlier.

British consumers have been pressured by inflation caused by the slump in sterling against the dollar and euro after the Brexit referendum in June 2016. The central bank also changed its policy stance to "neutral" from "calibrated tightening", a shift that allows it to act either way on the key rates.

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