Retail inflation cools to five-year low of 3.17 per cent in January

Hyderabad: India's annual consumer price inflation eased to 3.17 percent in January, its lowest level in at least five years, helped by a sharp cooling in food prices, government data showed. India's inflation cooled to its lowest in at least five years in January as food prices fell following the government's cash clampdown, but emerging price pressures mean the Reserve Bank of India (RBI) will probably keep interest rates on hold.Consumer prices rose by an annual 3.17 percent last month - their slowest pace since January 2012 when the government launched the current index series.

Economists surveyed by Reuters had expected prices to rise by 3.22 percent from a year earlier, compared with December's 3.41 percent increase.However, core inflation, which excludes volatile food and fuel prices, accelerated to around 5.1 percent last month from 4.9 percent in December, government data showed."The RBI will continue to hold, the RBI is seeing upside risks to inflation and one data point is not going to change their view dramatically," said Varun Khandelwal, managing director at Bullero Capital."Interest rates will remain on hold in the near term."Historically, India has paid more attention to wholesale prices than consumer ones, but the RBI now tracks retail inflation for setting its interest rates.