NEW DELHI: Retail inflation eased to a four-month low in Dec as food prices, led by vegetables, softened, but it remained stubborn above the 5% level, which could make it difficult for the Reserve Bank of India to lower interest rates.
Data released by the National Statistics Office (NSO) on Monday showed the retail inflation, as measured by the consumer price index (CPI), slowed marginally to 5.2% in Dec from 5.5% in Nov. The food price index moderated to 8.4% in Dec from a shade over 9% in Nov.
Rural inflation at 5.8% outpaced urban, which was at 4.6%. Vegetable inflation moderated to 26.6% during the month but edible oil prices remained stubborn and reached a 33-month high, rising 14.6% in Dec.
During Dec, a significant decline in inflation was seen in vegetables, pulses & products, sugar and confectionery, personal care & effects, cereals and products, according to the NSO.
It said the top five items showing highest year on year inflation were peas [vegetables] (89.1%), potato (68.3%), garlic (58.2%), coconut oil (45.4%) and cauliflower (39.4%). The key items with the lowest year on year inflation during the month were jeera (-34.7%), ginger (-22.9%), dry chillies (-10.3%), LPG (excluding conveyance) (-9.3%).
“Despite the softening, food inflation, which has a 39.1% weight in the CPI basket, remains elevated and is displaying rigidity. So far this fiscal, food inflation has averaged 8.4%, higher than 7.5% for the whole of fiscal 2024,” said Dipti Deshpande, principal economist at ratings agency Crisil.
