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The recent fall in Consumer Price Index (CPI)-based inflation, as shown in Table 1, and the fact that Wholesale Price Index (WPI)-based inflation has stayed at less than 6 per cent year-on-year, as shown in Table 2, set the stage for the Reserve Bank of India (RBI)'s decision on monetary policy this week.
While consumer inflation has moderated, it is still high. But core inflation, in Table 3, has shown an upward trend, but has stayed below 4 per cent for over a year, revealing that monetary policy has worked at least slightly.
RBI will also have seen that the recent trend in recorded food inflation seems to be downwards for both wholesale and consumer prices, as Table 4 shows.
On the other hand, it could be argued that there are distinct signs of recovery, too. Industrial production has grown recently, as Table 5 makes explicit.
And Table 6 shows credit growth has overtaken deposit growth for the first time in some months.
The possibility of future inflationary surprises is also strong. Table 7 shows that crude oil prices are only at the relatively low $106 level, and liable to spring a surprise if West Asia turns more volatile.
And, as Table 8 shows, food inflation has not taken into account the recent rise in the prices of some vegetables.
