Week in Numbers: Tracking India’s Economic Pulse

Annual CPI inflation was at 2.73% in January under the new series. While the National Statistics Office has not released the December inflation print under the revised base, back-series estimates indicate inflation at 1.17%, compared with 1.33% under the old series.

Headline inflation remains largely unchanged between the two series despite revision in weights. Average inflation over the last 11 years has been broadly similar, barring deviations in 2014–15, suggesting that the rebase has not materially altered the long-term trend.

The more notable shift is in core inflation. The new CPI series, with 2024 as the base year and expanded coverage, indicates that underlying price pressures are more contained than earlier assumed. Core inflation stood at 3.4% in January, compared with 4.6% in December under the old series, implying a gap of be about 120 basis points. The divergence partly reflects lower weights assigned to precious metals, where inflation remains elevated.

Food inflation, however, appears firmer under the new series at 2.13% in January compared with -2.71% in December in the old series.

Overall, the softer core reading strengthens the case for an extended pause by the Monetary Policy Committee, unless growth conditions weaken materially.

Retail automobile sales maintained strong momentum in January, rising 17.6% year-on-year to 2.72 million units, the second-highest monthly growth rate in the last 15 months after October’s GST-led surge. The data suggest that demand has held up beyond the immediate policy impulse.

Growth was led by two-wheelers and tractors, reinforcing rural resilience. Two-wheeler sales rose 20.8% to 1.85 million units, while tractor sales increased 22.9% to 114,759 units.

Passenger vehicle sales grew a more moderate 7.2% year-on-year, with volumes at 513,475 units. Passenger vehicle demand is increasingly being driven by rural markets, where sales grew 14.4% compared with 2.8% in urban areas. The rural share of passenger vehicle sales has risen steadily from 38.0% in 2024-25 to 40.8% in January.

Inventory levels continued to normalise, with passenger vehicles stocks declining to 32-34 days from 53-55 days in October. Lower inventories indicate of improved channel discipline and healthier working-capital management.

Commercial vehicle sales rose 15.1% to 107,486 units in January. Automobile retail sales are expected to strengthen further, partly supported by a favourable base effect. Sales had declined 7.2% to 1.90 million units in February last year.

Automobile wholesale sales were even stronger. Total despatches by automobile companies rose 23.5% year-on-year to 2.45 million vehicles in January, led by strong growth in two-wheelers.

Automobile wholesale sales have been extremely buoyant after the GST rate cut in late September, with total sales growing by 25.8% in the last three months.

Two-wheeler wholesale sales rose 26.2% to 1.93 million units in January, led by a 36.9% rise in scooter sales. Growth in passenger vehicle sales moderated to 12.6% in January to 449,616 units from 26.8% a month earlier.

Tractor despatches continued to grow strongly. Domestic despatches rose 43.0% year-on-year to 88,522 units in January. The sector has been one of the biggest beneficiaries of the recent GST rate cut, with the tax on tractors with engines of up to 1,800 cc reduced to 5% from 12%. Total tractor sales, including exports, rose 40.1% to 97,724 units, while production increased 14.6% to 106,168 units.

Mutual fund inflows rebounded sharply in January, driven primarily by debt schemes and gold exchange-traded funds. Open-ended schemes recorded net inflows of ₹1.565 trillion during the month, reversing net outflows of ₹665 billion in December.

Debt-oriented schemes attracted ₹748 billion in inflows, compared with outflows of ₹1.324 trillion in the previous month. Inflows into equity schemes moderated to ₹240 billion in January, down from ₹281 billion in December. Gold ETFs saw net inflows of ₹240 billion, more than double the previous month, amid a sharp rise in gold prices. Systematic investment plan contributions remained steady at ₹310 billion.

Assets under management stood at ₹81.01 trillion at the end of January, up 1.0% from a year earlier. Of the total, ₹18.10 trillion was invested in debt schemes and ₹34.87 trillion in equity schemes.

Coal production rose 3.2% year-on-year to 107.96 million tonnes in January. Coal despatches, however, declined for the fifth consecutive month, falling 1.4% to 92.18 million tonnes. Demand for coal has been weighed down by softer thermal power generation and higher renewable output. In January, coal despatches to the power sector declined 3.0% to 73.16 million tonnes.

Consumption of petroleum products rose 2.9% year-on-year to 21.05 million tonnes in January, driven by higher demand for petrol. Petrol consumption climbed 6.1% to 3.51 million tonnes, while diesel consumption increased 3.3% to 7.99 million tonnes. Liquefied petroleum gas consumption rose 6.6% to 3.03 million tonnes, while petroleum coke demand contracted 5.2% to 1.81 million tonnes.

The unemployment rate among persons aged above 15 years declined to 4.8% in October-December from 5.2% in the previous quarter. Unemployment rate among youth (15-29 years) declined to 14.3% from 14.8%, while joblessness among urban youth eased but remained elevated at 18.0% in October-December.

Bank credit growth rose to a 19-month high of 14.6% year-on-year as of January 31, from 13.1% as of January 15. Deposit growth also jumped to 12.5% from 10.6% over the same period.

Gross direct premiums of general insurers, including stand-alone health insurers, rose 11.7% year-on-year to ₹310.63 billion in January. For April-January, premiums increased 8.9% to ₹2.721 trillion. The growth rate for April-January is not strictly comparable with earlier periods because the Insurance Regulatory and Development Authority of India excluded premiums from long-term general insurance policies from its calculations with effect from October 1, 2024.

New-business premiums of life insurers rose 21.6% year-on-year to ₹375 billion in January, led by Life Insurance Corp of India. The state-owned insurer’s first year premium income rose 25.5% to ₹204 billion in January, while premiums of private insurers rose 17.2% to ₹170 billion. During April-January, premiums grew 13.9% to ₹3.484 trillion, with private insurers’ income rising 14.3% and LIC's income increasing 13.6%. LIC sold 13.57 million policies in the first 10 months of the year, down 0.8%, compared with 7.70 million policies sold by private insurers, up 6.0%.

India’s foreign exchange reserves fell to $717.06 billion as of February 6, driven by a fall in gold prices. Reserves fell $6.71 billion during the week. Foreign currency assets rose $7.66 billion and gold reserves declined by $14.21 billion. Overall, reserves have increased by $48.74 billion so far this fiscal year, driven primarily by appreciation in gold prices.

Winter rainfall remained uneven. Cumulative rainfall during January 1-February 13 stood at 13.5 mm, 49% below the long-period average. Reservoir storage levels remained well above historical norms. As of February 12, water levels in 166 reservoirs stood at 118.14 billion cubic metres, or 64% of their total live capacity — 10% higher than a year earlier and 25% above the 10-year average.

Coming up

•  Feb 16 – Wholesale Price Index for January
• Feb 16 – Trade data for January
• Feb 20 – HSBC India Flash PMI for February

Tailpiece
Telangana has overtaken Kerala as the state with the highest retail inflation in the country. Telangana had a retail inflation of 4.92% in January compared with 3.67% for Kerala, according to the new CPI series. As per the old series, Kerala and Telangana had inflation of 9.49% and 1.77% in December.