New Delhi, (UNI) India’s consumer price index (CPI)-based inflation rose to four-month high of 5.69% in December 2023 from 5.55% in the previous month, according to data released by Ministry of Statistics & Programme Implementation (MoSPI) on Friday.
Food basket inflation in December 2023 was 9.53% as against 8.70% in the previous month and 4.19% in December 2022.
Even as retail inflation moved up marginally it remained below the Reserve Bank of India (RBI)’s upper tolerance band of 6%.
The central bank is tasked to maintain price stability in the country and maintain retail inflation at 4% with a margin of 2% on either side. Retail inflation is among the key factors which RBI’s Monetary Policy Committee (MPC) considers while arriving at bi-monthly monetary policy.
In its bi-monthly monetary policy in early December, the central bank had kept the policy repo rate unchanged at 6.5%. This was the fifth time in a row that the RBI maintained status quo on the key interest rate.
In the last few months, inflation has shown an upward trend primarily on account of elevated prices of vegetables and fruits. Weather-related supply chain disruptions were among the reasons for shooting up of prices of several essential items.
The MoSPI data showed vegetable inflation was 27.64% in December 2023 while fruits inflation was 11.14% in this period. Fuel and light inflation was (-) 0.99% in December 2023.
“The outlook for the inflation for certain items like rice, wheat and pulses remains somewhat vulnerable, given the estimated fall in annual kharif production, as well as the YoY (year-on-year) lag in the ongoing rabi sowing season amid El Nino conditions,” said Aditi Nayar, Chief Economist, ICRA while commenting on December inflation numbers.
She further said, “Looking ahead, we forecast the CPI inflation to moderate appreciably to 5.2% in January 2024, aided by a dip in the food inflation print on account of an adverse base. Nevertheless, rate cuts appear distant, and are unlikely to emerge before August 2024, with a stance change expected in the preceding policy meeting.”
The RBI has projected CPI inflation at 5.4% in the current financial year.
