India’s retail inflation, based on the Consumer Price Index (CPI), for December stood at 5.22 per cent, slightly lower than 5.48 per cent in November, data released by the Ministry of Statistics & Programme Implementation showed on Monday. In October, CPI inflation had reached a 14-month high of 6.21 per cent and it stood at 5.69 per cent in December 2023.
While the December inflation print is within the RBI’s target range, it remained above earlier averages for the year. Corresponding inflation rates for rural areas stood at 5.76 per cent,down from 5.95 per cent in the previous month, and urban inflation eased to 4.58 per cent from 4.83 per cent in November, the NSO data showed.
Food inflation for the month in review stood at 8.39 per cent, down from 9.04 per cent in November 2024. Vegetable inflation dropped to 26.56 per cent from 29.33 per cent, pulses inflation stood at 3.83 per cent as against 5.41 per cent in November. While Cereals and Products inflation came in at 6.51 per cent, milk and products inflation stood at 2.80 per cent. Fuel and light inflation improved to -1.39 per cent from -1.83 per cent.
Per the NSO data, housing inflation stood at 2.71 per cent, slightly lower than 2.87 per cent in November, while clothing and footwear inflation remained stable at 2.74 per cent compared to 2.75 per cent in November 2024.
Reacting on the same, Aditi Nayar, Chief Economist and Head – Research & Outreach, ICRA Limited, said, “While the CPI inflation declined to 5.2 per cent in December 2024 from 5.5 per cent in November 2024, the pace of the correction was narrower than expected. In sequential terms, the dip was driven by food and beverages, even as the YoY inflation for fuel and light, and pan, tobacco and intoxicants recorded mild upticks. The sharp sequential fall in vegetable prices in January 2025 is likely to augur well for the food and beverages inflation print for the month, which is expected to ease to a five-month low of ~6.0-6.5 per cent in the month from 7.7 per cent in December 2024. Consequently, ICRA estimates the headline CPI inflation to soften to ~4.5-4.7 per cent in January 2025 from 5.2 per cent in December 2024.
Earlier last month, the RBI had raised the inflation projection for the current fiscal year to 4.8 per cent from 4.5 per cent.
Furthermore, the year-on-year inflation rate based on the All India Consumer Food Price Index (CFPI) for the month of December 2024 over December 2023 is 8.39 per cent. Corresponding inflation rates for rural and urban are 8.65 per cent and 7.90 per cent, respectively.