WPI Jan inflation surprisingly drops to 6.62 per cent

In what is a welcome relief for consumers and the industry, inflation for January surprisingly dropped to 6.62 per cent, as against consensus estimate of 7 per cent. The WPI inflation for December 2012 was 7.16 per cent.

WPI mfg inflation came in at 4.81 per cent, as against 5.01 per cent, month-on-month.

Primary article inflation

The index for this major group rose by 0.6 percent to 221.4 (provisional) from 220.0 (provisional) for the previous month. The groups and items which showed variations during the month are as follows:-
The index for 'Food Articles' group rose by 0.8 percent to 213.8 (provisional) from 212.2 (provisional) for the previous month due to higher price of poultry chicken (21%), condiments & spices and bajra (4% each), maize (3 %), egg, fish-marine and fish-inland (2% each) and moong, jowar, mutton and urad (1% each). However, the price of gram (3%), coffee (2%) and arhar, ragi and tea (1% each) declined.

The index for 'Non-Food Articles' group declined by 0.3 percent to 202.3 (Provisional) from 202.9 (Provisional) for the previous month due to lower price of flowers (14%), cotton seed (3%), rape & mustard seed and fodder (2% each) and raw cotton and linseed (1% each). However, the price of gingelly seed (16%), niger seed (6%), copra and raw jute (5% each), castor seed (4%), groundnut seed (2%) and raw silk and logs & timber (1% each) moved up.
The index for 'Minerals' group rose by 1.8 percent to 347.0 (Provisional) from 340.8 (Provisional) for the previous month due to higher price of barytes (47%), sillimanite (19%), iron ore (4%) and crude petroleum (1%).
The index for the manufactured group rose by 0.2 percent to 148.3 (Provisional) from 148.0 (Provisional) for the previous month.

The drop in inflation is now likely to provide some room for the RBI to cut interest rates when it meets in March 2013.

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