Inflation up to 7.65% in January 2012 as per India's first-ever CPI-based inflation rate

Provisional annual inflation for January 2012 stood at 7.65% as compared to January 2011. Inflation in rural areas was up to 7.38% and for the urban areas it was at 8.25%, as per data released by the Ministry of Statistics & Programme Implementation.

The highest price increase over the corresponding period last fiscal was for clothing, bedding and footwear, an indicator that buyers were spending more on accessories. Among food products, the sharpest increase in prices was for milk and products at 16.5%, followed by oils and fats at 13.47%. Retail prices also rose by 10.45% for eggs, fish and meat. Vegetables were cheaper by over 24% on a nationwide basis in January over the same month last year. Prices for fuel and light also jumped sharply at 13.13%.   

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation releases Consumer Price Indices (CPI) on base 2010=100 for all-India and States/UTs separately for rural, urban and combined every month with effect from January, 2011. However there has been a long pending demand of ministries and various users for a comprehensive consumer inflation rate. Hence for the first time the annual consumer price index (CPI) data has been released which measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India.

Unlike most central banks, which mainly use the CPI to monitor inflation and set monetary policy, the Reserve Bank of India (RBI) has long used the wholesale price index (WPI) as India's main inflation gauge. The Consumer Price Index, which was introduced a year ago, will now exist alongside the prevailing Wholesale Price Index (WPI), followed in India. The CPI rate has been introduced keeping in mind that demand-side pricing would be a better indicator of inflation than the WPI since it defines the extent to which retailers may pass on any sustained increase in wholesale prices to the consumers. The WPI focuses on prices from the producers' side. 

Yesterday the Ministry of Labour & Employment also released January numbers for All-India CPI for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL)(Base: 1986-87=100). As per the data, the overall index remained stationary at 618 points for Agricultural Labourers and 619 points for Rural Labourers in January 2012 as compared to December 2011. Though all the items in the index showed an upward price movement, food items witnessed a fall keeping the index stationary.

Point to point inflation, saw a sharp drop and the Consumer Price Index for Rural Labourers (CPI-RL) fell to 4.92% in January 2012 (year-on-year) as compared 6.37% in December 2011.The rate of price rise based on the Consumer Price Index for Agricultural Labourers (CPI-AL) also fell to 5.27% in January from 6.72% in December 2011.

The rise/fall in index varied from State to State.  In case of Agricultural Labourers, it recorded an increase between 1 to 5 points in 14 States and a decrease between 2 and 12 points in 5 States. It, however, remained stationary in 1 State. Maharashtra with 690 points topped the index table whereas Himachal Pradesh with the index level of 514 points stood at the bottom.

In case of rural labourers, 14 States recorded an increase between 1 to 5 points, while six States saw a fall of between 1 and 11 points. Once again, Maharashtra was at the top with 683 points, while Tripura was at the bottom with 534 points.