Retail inflation spikes to 7.35% in December, highest in over 5 years

The latest CPI data exceeded the Reserve Bank of India’s upper margin of 6 per cent. The government has mandated the central bank to keep inflation within the range of 4 per cent with a margin of 2 per cent on either side.

Prior to this high, retail inflation had witnessed a spike of 7.39 per cent in July 2014.

The Consumer Food Price Index (CFPI) or the inflation in the food basket rose to 14.12 per cent in the month of December against 10.01 per cent in November. In December 2018, the CFPI saw a negative growth of (-)2.65 per cent, the MoSPI data showed.

The inflation rose mainly due to a sharp rise in prices of vegetables that saw a 60.5 per cent on-year rise in December 2019. The pulses and products segment saw a rise of 15.44 per cent, while that of meat and fish rose 9.57 per cent and egg prices gained 8.79 per cent.

Commenting on the inflation figures, Deepthi Mary Mathew, Economist at Geojit Financial Services said “It was more or less expected that the inflation rate for December will breach the upper band of 6 per cent, due to the rising vegetable prices. However, inflation rate of 7.35 per cent is at the higher end.”

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