Chirag Desai

Retail inflation lowest in 5 years


Shailesh Andrade, reporting for Reuters:

Consumer prices rose by an annual 3.17 percent last month — their slowest pace since January 2012, when the government launched the current index series.
Economists surveyed by Reuters had expected prices to rise by 3.22 percent from a year earlier, compared with December’s 3.41 percent increase.

The article attributes the higher than expected drop to demonetization. The data, though, seems to indicate that while demonetization may have supplemented the decline, it is not the root cause — there has been a near consistent decrease in inflation since 2014, and would imply other economic and governance reasons are also playing a part. The trendline therefore makes for positive reading.

Since July 2016, which is the peak 6% seen last calendar year and 3 months pre-demonetization, it has dropped consistently month-to-month to end at 3.17% in January.