Retail inflation at 5-year high of 7.35% in Dec, crosses RBI's safe level

Retail inflation rose to 7.35% December last year, highest since July 2014, surpassing the Reserve Bank of India (RBI)’s comfort level, mainly due to the spiralling prices of vegetables as onions were selling costlier.

Data released by the National Statistical Office (NSO) on Monday (January 13) showed the spike in inflation in the vegetable segment was 60.5% during the month compared to December 2018. The inflation in pulses and products was recorded at 15.44%, while in the case of meat and fish, it was nearly 10%.

The overall retail inflation based on Consumer Price Index (CPI) was 2.11% in December 2018 and 5.54% in November 2019. The previous high in retail inflation was witnessed at 7.39% in July 2014, the year Narendra Modi-led government assumed office for the first term.

Also read: Retail inflation shoots to 3-year high of 5.54% in November

According to the data released by the NSO, the overall food inflation rose to 14.12% in December as against (-) 2.65% in the same month of 2018. The food inflation was 10.01% in November 2019. The central government has mandated the RBI to keep inflation in the range of 4% with a margin of 2% on either side.

The RBI, which mainly factors in the CPI-based inflation, is scheduled to announce its next bi-monthly monetary policy on February 6. In its December policy, the central bank, which had been reducing rates, had kept the repo rate unchanged citing inflationary concerns.

(With inputs from agencies)