CPI cools off in January

The inflation CPI cooled down in January after touching 17-month high in December to 5.21 per cent. The CPI for January came down to 5.07 per cent. The food inflation declined marginally to 4.7 per cent. 

The major relief in inflation was due to decline in prices of vegetables and fruits. The vegetable basket slowed down to 26 per cent in January as against 29 per cent in December. Also, the fruit prices edged at the lowest pace of 6.24 per cent. 

Going ahead, good monsoon will be a key to lower inflation. Further, the recent fall in oil prices also bodes well for reducing inflation. Oil prices are also expected to moderate further due to rising US output. Lower oil prices and good monsoon are key triggers for inflation in the coming months. 

The moderate inflationary levels may ease the pressure of interest rate hike for the central bank. However, sustaining inflation at 5 per cent level will be a key task to watch out for.