December Sees India’s Retail Inflation Reach a 4-Month High of 5.69%

December saw a four-month high for India’s headline retail inflation rate of 5.69%, which was just lower than the forecast 5.9%

The Ministry of Statistics and Programme Implementation released the December headline retail inflation rate, which shot up to a four-month high of 5.69% on January 12. Although it above the 5.55% recorded in November, it did not meet the 5.9% forecast of economists. The Consumer Price Index (CPI) demonstrated a 0.3% monthly decline.

Inflation Breakdown (December 2023)

Food Inflation: 9.53% (-0.9% MoM)

Cereals: 9.93% (0.8%)

Meat, Fish: 1.15% (-1.2%)

Edible Oils: -14.96% (-0.1%)

Fruits: 11.14% (-1.6%)

Vegetables: 27.64% (-5.3%)

Pulses: 20.73% (0.5%)

Other Sectors:

Clothing, Footwear: 3.61% (0.2%)

Housing: 3.63% (-0.6%)

Fuel, Light: -0.99% (0.2%)

Miscellaneous: 4.07% (0.2%)

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For the second consecutive month, retail inflation fell short of projections, while having remained over the Reserve Bank of India’s 4% objective for 51 consecutive months. The main cause was a negative base impact, even though the month-to-month variation in pricing decreased. With food and gasoline excluded, core inflation fell to 3.9%. Ahead of the interim budget and the Monetary Policy Committee’s decision in February to keep the 6.5% policy repo rate in place for the next five meetings, the lower-than-expected December numbers provide policymakers some respite.