India’s retail inflation rate, based on the Consumer Price Index, fell to a 4-month low of 5.22 per cent in December as prices of vegetables, pulses and sugar eased during the month bringing respite to household budgets, according to figures released by the Ministry of Statistics on Monday.
The easing of inflation reflects a steadily declining trend after having touched a 14-month high of 6.21 per cent in October. CPI inflation had declined to 5.48 per cent in November.
The decline in retail inflation in December was attributed to the easing of the price spiral in key food items.
“During the month of December, a significant decline in inflation is observed in vegetables, pulses, sugar and confectionary, cereals and personal care & effects,” according to a Ministry statement.
The year-on-year housing inflation rate for the month of December is 2.71 per cent, down from 2.87 per cent in November. The housing index is compiled for the urban sector only.
The top five items showing the highest year on year Inflation at the All India level in December 2024 are Peas (Vegetables) (89.12 per cent), Potato (68.23 per cent), Garlic (58.17 per cent), coconut oil (45.41 per cent) and Cauliflower (39.42 per cent). The key items having the lowest year-on-year inflation in December 2024 are jeera (-34.69), ginger (-22.93 per cent), dry chillies (-10.32 per cent), LPG (excl. conveyance) (-9.29 per cent), official data show.
The easing in inflation is a welcome sign as it was the first time that the rate of retail inflation crossed the RBI’s upper limit of 6 per cent in October. The RBI is waiting for the retail inflation to come down to 4 per cent on a durable basis before it can go in for an interest rate cut to propel growth.
The RBI during its last policy review slashed the cash reserve ratio (CRR) for banks by 0.5 per cent to make more funds available for lending to spur economic growth but kept the key policy repo rate unchanged at 6.5 per cent with an eye on inflation.
The CRR has been reduced from 4.5 per cent to 4 per cent which will infuse Rs 1.16 lakh crore into the banking system and bring down market interest rates.
The monetary policy decision maintains a delicate balance between controlling inflation and pushing up the growth rate in a slowing economy,
In his last monetary policy view, former RBI Governor Shaktikanta Das said, “India’s growth story is still intact. Inflation is on the declining path, but we cannot overlook the significant risks in the outlook. This risk cannot be underestimated.”
He was optimistic about the outlook for the economy, observing that “the balance between inflation and growth is well poised.”
–IANS
