Retail Inflation cools further to 2.05% in Jan

Retail Inflation cools further to 2.05% in Jan

1. According to the data released from the Central Statistics Office (CSO), retail inflation for the month of January has declined to 2.05%.  This decline has been primarily due to a) sustained decline in food prices and b) a sharp decline in energy prices.
2. The retail inflation demonstrates overall inflation in the economy. It is based on the Consumer Price Index (CPI). It reflects changes in the retail prices of specified goods and services over a time period which are traded by particular consumer group. There are four types of CPI: a) CPI-IW (Industrial Worker), b) CPI-UNME (Urban Non-Manual Employees), c) CPI-AL (Agricultural Labourers) and d) CPI-RL (Rural Labourers)
3. RBI has adopted CPI as the key measure for determining inflation situation of Indian economy, on recommendation of Urjit Patel Committee.
4. The Core Inflation has also declined to 5.4%. Core inflation demonstrates inflation apart from temporary shocks and volatility. It is measured using the CPI by excluding food and fuel components as their prices are highly volatile.
5. Industrial output growth as measured by the Index of Industrial Production (IIP) has remained low at 2.4%. IIP is a composite indicator that measures changes in the volume of production of a basket of industrial products.