December Retail Inflation surges to 7.35%; Crosses RBI's target band
Climbing on the back of rising food prices, India's retail inflation rose sharply to 7.35 per cent in December 2019 from 2.11 per cent in December 2018. It was 5.54 per cent in November 2018.
Data released by National Statistical Office (NSO) says the food inflation rose to 14.12 per cent in December 2019 against negative (-)2.65 per cent in the same month of the corresponding year. It stood at 10.01 per cent in November 2019.
All India Inflation rates (%) based on CPI (General) and CFPI
The rise in the Cost Price India (CPI) indicates that retail inflation has breached the Reserve Bank of India's (RBI) upper-end target. It is the first time that the rates have crossed the targeted band since July 2016. The union government has mandated RBI to keep inflation in the range of 4 per cent with a margin of 2 per cent on either side.
Earlier, the central bank kept interest rates unchanged in December monetary policy announcement citing inflation as a concern area after allowing five cuts totalling 135 basis points across the year. The next interest rate decision will be announced on February 6, 2020, a few days after the Finance Minister Nirmala Sitharaman presents her first full-year Union budget on February 1, 2020.
Key Highlights of the data released by NSO
* Food inflation stood at 14.12 per cent against 12.26 per cent of November 2019.- * Vegetable inflation stood at 60.5 per cent against 35.99 per cent of November 2019.
- * Household goods and services inflation stood at 1.75 per cent against 2.18 per cent of November 2019.
- * Inflation on Health stood at 3.80 in December 2019 and it stood at 5.49 per cent of November 2019.
- * Inflation on cereal and products stood at 4.36 per cent against 3.71 per cent of November 2019.
- * Inflation on Milk and its products stood at 4.22 per cent against 3.46 per cent of November 2019.
- * Inflation on food and beverages stood at 12.16 per cent against 8.66 per cent of November 2019.
- * Housing inflation stood at 4.30 per cent against 4.49 per cent of November 2019.