India's wholesale price index increased by 2.84 percent in January, down from 3.58 percent in December. The index rose 0.09 percent on the month after falling 0.52 percent previously. Consumer price index data published earlier in the week also showed a decline in headline inflation from 5.21 percent in December to 5.07 percent in January, still well above the mid-point of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent.
The fall in headline WPI inflation in January largely reflects a weaker increase in food prices, which account for around 15 percent of the index. These increased by 3.00 percent on the year in January, down from 4.72 percent year in December, with year-on-year price gains in vegetables still very strong but well down on the previous month. Prices for eggs, meat, and fish also moderated. The year-on-year increase in fuel and power prices (around 13 percent of the index) also slowed from 9.16 percent in December to 4.08 percent in January, while inflation for manufactured products (around 64 percent of the total index) rose slightly from 2.61 percent to 2.78 percent.
Despite this fall in WPI and CPI inflation in January, officials at the Reserve Bank of Inflation forecast headline CPI inflation to remain above 5.0 percent in the first half of the upcoming fiscal year and then to fall to around 4.5 percent in the second half,. However, they also argue that risks to this forecast are skewed to the upside and highlighted their commitment to bring inflation back down to around the mid-point of their target range of 2.0 percent to 4.0 percent.