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India’s battle with overshooting inflation made further strides at the start of 2017, with price growth falling to its lowest level in at least five years.

Data from the Indian central bank showed inflation eased to a pace of 3.17 per cent in January compared to the same month in 2016, moderating from 3.41 per cent the month prior. It is the lowest annual figure since comparable data going back to 2012.

The encouraging figures come after the Indian central bank surprised analysts by holding steady on any interest rate changes last week, defying expectations of an easing in monetary policy to boost growth.

Falling inflation should provide more breathing space for the central bank to lower interest rates while staying within its 4 per cent inflation target.

Chart via Bloomberg

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