Retail inflation in December 2018 continued the downward trend, slipping to an 18-month low of 2.19 per cent with food prices staying in the negative zone along with lower vegetable and fuel prices. This means that Indians are paying less for vegetables, pulses, sugar or eggs even as there was a marginal increase in prices of meat, fish and pulses.
Retail inflation in December is the lowest since June 2017, when it had touched 1.46 per cent. In November, retail inflation was 2.33 per cent. Earlier in the day, data released by the Ministry of Statistics and Programme Implementation showed that inflation based on wholesale prices fell to an eight-month low of 3.80 per cent in December.
According to the data, food inflation remained in the negative zone at 2.51 per cent compared to (-) 2.61 per cent in November. For 28 months running, from September 2016 to December 2018, consumer food inflation in India has been ruling below general inflation.
In six of these 28 months — May, June and July 2017, and then October, November and December 2018 — the annual increase in the official consumer food price index has been negative.
Deflation in food articles stood at 0.07 per cent in December, against 3.31 per cent in November. Vegetables, too, saw deflation at 17.55 per cent in December, compared to 26.98 per cent in the previous month.
Fuel and light inflation was 4.54 per cent in December, down from 7.39 per cent in November on back of reduction in prices of petrol and diesel. The Wholesale Price Index-based inflation stood at 4.64 per cent in November 2018 and 3.58 per cent in December 2017.
The Reserve Bank of India (RBI) mainly takes into account retail inflation data while formulating its monetary policy. In its fifth monetary policy review for the fiscal, the Central bank kept interest rates unchanged last month.
The central bank lowered retail inflation projection to 2.7-3.2 per cent for the second half of the current fiscal, citing normal monsoon and moderate food prices.