The fuel and power index declined 1.39% in January 2023, while the prices of mineral oils declined 2.13% during the period.

The index for manufactured products increased by 0.14% in January 2023. Out of the 22 NIC two-digit groups for manufactured products, 12 groups saw an increase in prices, while 10 groups saw a decrease in prices.

Notably, India’s retail inflation, measured by the Consumer Price Index (CPI), jumped to 6.52% in January 2023 from 5.72% in December 2022, breaching the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, the government data released yesterday showed.

While urban inflation rose to 6% in January, compared with 5.39% in the previous month, the rural inflation soared to 6.85% last month from 6.05% in December 2022. Food inflation, measured by the Consumer Food Price Index and accounts for nearly half the CPI basket, rose to 5.94% in January, up from 4.19% in December. Fuel and light inflation rose 10.84%. The inflation rate for the clothing and footwear segment rose by 9.08%.

In the food basket, the inflation rate for vegetables contracted by 11.70% in January, while that for cereals rose by 16.12%. The inflation rate for eggs and milk stood at 8.7%. Inflation in spices jumped to 21%.

India's retail inflation had eased to a one-year low of 5.72% in December 2022, down from 5.88% in November 2022, thus staying below the Reserve Bank's upper threshold of 6% for the second month in a row.

According to the RBI, the country’s retail inflation for FY2022-23 is projected at 6.5%, whereas for FY23-24 it is expected to stay within the RBI’s upper tolerance band at 5.3%, with Q1 at 5%, Q2 at 5.4%, Q3 at 5.4%, and Q4 at 5.6%.

“Headline inflation has moderated with negative momentum in November and December 2022, but the stickiness of core or underlying inflation is a matter of concern. We need to see a decisive moderation in inflation. We have to remain unwavering in our commitment to bringing down inflation. Thus, monetary policy has to be tailored to ensuring a durable disinflation process,” RBI Governor Shaktikanta Das said during the MPC announcements last week.

FY23 Inflation Forecast

Jan wholesale inflation dips to 24-month low at 4.7%