Snapping its five-month falling trend, and just as Reserve Bank Governor Raghuram Rajan had cautioned, retail inflation picked up pace in December, growing 5 per cent against 4.38 per cent in November.
Rising consumer prices of fruit and vegetables pushed up retail inflation. Consumer price inflation in fruits quickened from 13.7 per cent in November to 14.8 per cent in December. Vegetable consumer prices had fallen sharply in November but rose slightly in December. Retail inflation for vegetables went from minus 10.9 per cent to 0.6 per cent. Retail inflation in milk and milk products lessened a bit but remained high at 9.6 per cent against 10.2 per cent in November.
Inflation in consumer prices of cereals and their products came down further to 3.98 per cent in December from 5.2 per cent. Retail inflation in pulses was down marginally at 7.24 per cent against 7.54 per cent in November.
Despite the low base effect in December, retail inflation now stands well within the Reserve Bank’s target of 8 per cent for January, 2015, implying prices were indeed cooling down. The global slide in oil prices has provided a further cushion.
“Consumer price inflation printed in line with expectations mainly driven by base effects…However, food prices continue to remain a wild card and we are likely to see inflation move up in coming months,” said Deloitte India Economist Anis Chakravarty.
