Retail inflation falls to 4-month low of 5.22% in December as food prices ease

Trade inflation slowed to a four-month low of 5.22 percent in December compared to 5.48 percent in November, mainly due to the easing of prices in the food basket, according to data from the government published on Monday.

According to the CPI data published by the National Statistics Office (NSO), inflation in the basked food reduced to 8.39 percent in December. It was 9.04 percent in November and 9.53 percent in December 2023.

“The CPI (General) and food inflation in December 2024 is the lowest in the last four months,” said the NSO.

Inflation based on the Consumer Price Index (CPI) was 5.48 percent in November and 5.69 percent in December 2023.

Last month, the Reserve Bank of India raised the inflation projection for the current fiscal year to 4.8 percent from 4.5 percent. He also said that persistent food price pressures are likely to keep headline inflation high in the December quarter.

Headline inflation based on the CPI increased from an average of 3.6 percent during July-August to 5.5 percent in September and further to 6.2 percent in October 2024.

The latest retail inflation figure was within the Reserve Bank of India’s (RBI) medium-term target of 2-6 percent.

Food inflation, a persistent challenge, increased 8.39 percent annually in December compared to 9.04 percent in the previous month, and 9.53 percent in the period a year ago. Food inflation increased by 10.87 percent in October, 9.24 percent in September and 5.66 percent in August.

India’s retail inflation rose to a 14-month high of 6.2 percent in October, with food inflation reaching a 15-month high of 10.9 percent.

Food prices have kept inflation high in recent months, largely driven by a sustained rise in vegetable prices, which have mostly risen by double digits for a year.

Rural inflation decreased to 5.76 percent, compared to 9.10 percent in November, while urban inflation slowed to 4.58 percent from 8.74 percent the previous month.

RBI’s Monetary Policy Committee (MPC) in December cut its growth forecast for this fiscal year to 6.6 percent from 7.2 percent, while raising its inflation estimates to 4.8 percent from 4.5 percent last year. the same period, highlighting concerns about food inflation.