 "December retail inflation up 5.61%; highest in new series")
The December retail inflation headline figure was the highest in 15 months and the highest since the Central Statistics Office (CSO) started releasing data according to the new base year, from January 2015. The previous high under the new series was seen in November.
The rise in monthly CPI inflation came on the back of increasing food prices, especially pulses, which rose 46 per cent year on year. According to data released by CSO, food inflation rose 6.4 per cent in December, compared with 6.07 per cent rise in November and 3.96 per cent in December last year. Analysts polled by Reuters had predicted December retail inflation at 5.6 per cent year-on-year, while those polled by Bloomberg had forecast the inflation at 5.30 per cent.
Among the sub-groups, the prices of pulses, which have a weight of almost 3 per cent on the CPI, rose 38.47 per cent for rural areas and nearly 61 per cent for urban areas in November.
Vegetables, with a weight of 7.5 per cent, rose 4.6 per cent combined. Cereals and products, with a weight of 12.35 per cent, rose 2.12 per cent for the month.
Miscellaneous items — which includes household goods and services, health, transport and communication, among others, and has a weight of 27.26 per cent — rose 3.95 per cent year-over-year in December.
“Retail inflation in December 2015 came in as per our expectations of 5.6 per cent. It has been inching up since August 2015. Despite on increasing trend, we believe it will remain within RBI (Reserve Bank of India)’s comfort zone. Chances of any monetary policy action until Budget 2016 are negligible,” said Devendra Pant, chief economist at India Ratings.
The RBI’s “comfort zone” was dictated by a monetary policy framework agreement between the government and the central bank. It had targeted CPI inflation for January at below 6 per cent. That was reduced to 5.8 per cent by RBI Governor Raghuram Rajan in October.