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CPI inflation falls again in December, hits 1-year low of 5.72% – Moneycontrol

Headline retail inflation has now spent 39 consecutive months above the Reserve Bank of India’s medium-term target of 4 percent


India’s headline retail inflation rate eased to a one-year low of 5.72 percent in December from 5.88 percent the previous month, data released on January 12 by the ministry of statistics and programme implementation showed.

At 5.72 percent, the latest Consumer Price Index (CPI) inflation print is below the consensus estimate.

As per a Moneycontrol poll, inflation was seen little changed in December at 5.9 percent.

This is the third month in a row that CPI inflation has fallen. It is also the second month in a row that it has come in lower than the upper bound of the Reserve Bank of India’s (RBI) 2-6 percent mandate.

As for the medium-term target of 4 percent, CPI inflation has now exceeded it for 39 months in a row.

December inflation internals

The fall in headline inflation in December was led by food items, with food inflation tumbling to 4.19 percent – also the lowest in a year.

Within food, vegetables prices fell the most, with the index down 12.7 percent in December compared to November.

  Meat, fish5.13%-0.2%
  Oils, fats0.53%-0.2%
Clothing, footwear9.58%0.5%
Fuel, light10.97%0.4%

Other food items that saw a sequential decline in prices include meat and fish, eggs, fruits, and sugar.

Cereal prices continued to edge higher, with the index posting a 1.1 percent month-on-month increase in the last month of 2022.

Food apart, there was a pleasent surprise from housing, whose index fell 0.6 percent month-on-month. This is the first time in six months that the index for housing has declined sequentially.

However, month-on-month gains continued to be made by clothing and footwear, fuel and light, and the miscellaneous groups of the CPI.

On the whole, the general index of the CPI was down 0.5 percent in December from November, indicating falling price momentum.

Siddharth Upasani is a Special Correspondent at Moneycontrol. He has been covering the Indian economy, economic data, and monetary and fiscal policies for nine years. He tweets at @SiddharthUbiWan.

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