Retail inflation accelerates to four-month high of 5.7%

India’s retail inflation accelerated to a four-month high of 5.7% in December 2023, from 5.55% a month earlier, led by an uptick in food prices that rose 9.5% nationally and breached the 10%-mark for urban consumers.

India’s retail inflation accelerated to a four-month high of 5.7% in December 2023, from 5.55% a month earlier, led by an uptick in food prices that rose 9.5% nationally and breached the 10%-mark for urban consumers.

Although rural consumers faced a slightly lower uptick in food prices at just under 9%, they faced higher overall inflation at nearly 6% compared to 5.5% faced by their urban peers in December.

Despite a sharper year-on-year uptick in prices, the Consumer Price Index (CPI) declined 0.32% from November 2023 levels, with the Consumer Food Price Index easing by 0.9%.

While price rise hardened in December, the average consumer price inflation for the October to December quarter has been 5.4%, moderately lower than the Reserve Bank of India’s projection of 5.6%.

Within the food basket, inflation picked up in pulses (20.73%), vegetables (27.6%), fruits (11.14%), and Sugar (7.14%), while it was just fractionally lower for cereals and spices, which continued to record steep inflation of 9.9% and 19.7%, respectively, in December.

Inflation continued to ease in the case of milk (5.1%), meat and fish (1.15%) and egg (4.4%). Meanwhile, the deflation in edible oil prices which had surged in 2022 after the Ukraine conflict, remained virtually unchanged from November levels at 15%.

Interestingly, while consumer food prices rose faster in urban areas at 10.4%, rural consumers witnessed greater inflation in some products such as cereals (10.3%), milk, spices and sugar.