Economists expect inflation to be 8.5% in January

NEW DELHI: Economists see overall inflation moving up slightly to 8.5 per cent in January because of high food prices and hike in petrol rates last month.

Headline inflation, which also captures the increase in wholesale prices of food commodities, soared to 8.43 per cent in December, from 7.48 per cent in the previous month.

"Inflation in January will continue to remain at around 8.5 per cent. However, it will start moderating February onwards, on the back of a bumper crop," said D K Joshi, chief economist at Crisil.

The government is slated to announce the headline, or overall, inflation data on Monday.

As for food inflation, it has remained high during the course of January before declining to a seven-week low of 13.07 per cent towards the end of the month.

Besides high food inflation, the decision of the oil marketing companies to hike petrol prices by about Rs 2.50 per litre with effect from January 15 will impact the headline inflation for month.

Ficci director-general Rajiv Kumar too expects the headline inflation to be around 8.5 per cent in January before declining in subsequent months.

"Headline inflation (based on wholesale prices or WPI) will be 8 per cent by March-end as globally, the crude and commodity prices continue to remain high," Kumar added.

Axis Bank chief economist Saugata Bhattacharya said that the decline in food inflation in the last week of January is unlikely to have much of an impact on inflation based on Wholesale Price Index (WPI) for January.

Meanwhile, the Reserve Bank has recently raised the March-end forecast for overall inflation to 7 per cent from 5.5 per cent earlier.