Annual retail inflation in India rose to 5.69 per cent in December from 5.55 per cent the previous month, according to government data. The increase was within the Reserve Bank of India's target range for the fourth consecutive month.
Food inflation, which accounts for nearly half of the overall consumer price basket, was 9.53 per cent in December, up from 8.70 per cent in November. The Reserve Bank of India (RBI) had said in a report in December that with inflation remaining above the central bank's target, monetary policy could remain in "restrictive territory."
The Reuters poll of 56 economists forecasted a rate of 5.87 per cent.
The inflation rates in rural and urban areas stood at 5.93 per cent and 5.46 per cent, respectively, an increase from the rates of 5.85 per cent and 5.26 per cent in the same month the previous year.
Vegetable inflation experienced a significant rise in December, surging to 27.64 per cent from 17.7 per cent in November. Fuel and light inflation contracted by (-)0.99 per cent, compared to (-)0.77 per cent in the previous month.
What is the RBI's inflation target?
During the December policy meeting, the Reserve Bank of India (RBI) maintained the inflation target at 5.4 per cent. In August, the RBI's Monetary Policy Committee (MPC) revised its inflation forecast for the fiscal year 2023-24 from 5.1 per cent to 5.4 per cent.
RBI Governor Shaktikanta Das emphasised the successful disinflation achieved through monetary policy actions and stressed the need to closely monitor the trajectory of food inflation.
He had previously acknowledged the impact of food prices on the inflation outlook and expressed concern about persistently high food inflation in India, especially in the lead-up to the upcoming general elections.
Das reiterated the RBI's commitment to achieving a 4 per cent inflation target. He highlighted that the central bank considers various factors beyond inflation when shaping policies, recognizing that headline inflation remains susceptible to recurring shocks from both domestic and international factors.
(With Reuters inputs)
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