Statsguru: Will headline inflation converge to core inflation?

In the recent past, economists struggled to decipher the changing inflation dynamics in India. The pre-2013 period was characterised by core inflation converging to headline inflation. But, post 2013, this changed with headline inflation converging to the core. However, this hasn’t been the case past year. 

While core inflation touched 5.36 per cent in January, the headline retail inflation rate dipped to 2.05 per cent (Chart 1). Further, the consumer food price index contracted by 2.17 per cent in January, even as wholesale food prices rose by 2.3 per cent (Chart 2).