Retail Inflation Eases To 12-Month Low At 5.7% In December, Within RBI’s Comfort Zone: CareEdge

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CareEdge Research Report

India’s Consumer price index-based retail inflation data came as a positive surprise in December, easing below the Reserve Bank of India’s upper tolerance for the second straight month as food inflation moderated.

Headline CPI eased to 5.7% (YoY), its lowest levels since November 2021, as compared to 5.9% (YoY) a month ago. On a sequential basis, the headline number contracted 0.4%. The softening is attributed to a larger-than-expected contraction in vegetable prices (down 15% YoY) that helped offset the rise in other food items like cereals, eggs, meat, milk, and spices.

Nevertheless, core inflation remained sticky over 6% as pressure emanating from pent up service sector demand continued through December, evident from rising costs of healthcare, education, and personal care.

Speaking of the rural-urban classification, inflationary pressures moderated at a faster pace in urban areas as compared to that of the rural regions. Nevertheless, the sequential moderation revealed a similar softening for both.

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