Inflation at 18-month low, gives RBI room to ease monetary policy

The consumer food price index contracted 2.51% in December; in November, it had contracted 2.61%

Inflation rates, both wholesale and retail, fell in December last year, according to the government data released on Monday. This, in turn, might prompt the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) to change its stance from calibrated tightening to neutral in its review next month.

The retail inflation rate declined to an 18-month low of 2.19 per cent. The wholesale inflation rate also came down to 3.8 per cent, the lowest in eight months. 

Falling fuel and food prices caused inflation to fall, according to the data.

The core retail inflation rate touched a nine-month low of 5.6