India’s retail inflation rose to 5.69 per cent in December which is marginally higher than 5.5 per cent in the previous month, states data released by the Ministry of Statistics and Programme Implementation (Mospi).
It should also be noted that inflation, measured by the Consumer Price Index (CPI) has remained within the Reserve Bank of India’s (RBI) acceptable limit of 2 per cent to 6 per cent.
The latest data by Mospi revealed a sequential contraction of 0.32 per cent in the CPI. It is also worth mentioning that food inflation for December has been standing at 9.53 per cent.
The inflation rates in rural and urban areas have stood at 5.93 per cent and 5.46 per cent, respectively, showing an increase from 5.85 per cent and 5.26 per cent recorded in the same month the previous year.
December also showed a notable rise in vegetable inflation, surging to 27.64 per cent from 17.7 per cent in November. On the other hand, fuel and light inflation contracted by 0.99 per cent, compared to 0.77 per cent in November.
During the December policy meeting, the RBI maintained the inflation target of 5.4 per cent. In August, the RBI Monetary Policy Committee (MPC) revised its FY24 inflation forecast from 5.1 to 5.4 per cent.
The RBI Governor, Shaktikanta Das, has emphasised the successful reduction of inflation by implementing monetary policies. He also emphasised the significance of monitoring the trajectory of food inflation.
Governor Das had previously acknowledged the impact of food prices on the inflation outlook and expressed concern over the persistently high food inflation in India, particularly in the lead-up to the general elections.
Das reaffirmed the RBI’s commitment to achieving a four per cent inflation target. He recently explained that the central bank takes into account various factors beyond inflation when shaping policies, while still acknowledging that headline inflation remains vulnerable to recurring shocks from both domestic and international factors.
