India's Consumer Inflation Expected To Dip To 5.3% In December: Poll

Food prices, which account for nearly half of the consumer price index basket, have been a major contributor to inflation in recent months, primarily due to sustained increases in vegetable prices

The forecasts for the data, which is scheduled to be released on January 13 at 1030 GMT, varied between 4.50 per cent and 5.60 per cent

Source : अभिषेक नयन

India's consumer price inflation is expected to have dropped to 5.3 per cent in December, driven by a slowdown in food price increases, according to a Reuters poll of economists. This reduction in inflation fuels expectations of a potential interest rate cut by the Reserve Bank of India (RBI) next month, as the economy shows signs of slowing down.

Food prices, which account for nearly half of the consumer price index (CPI) basket, have been a major contributor to inflation in recent months, primarily due to sustained increases in vegetable prices, which have been in double digits for over a year. However, these prices have begun to ease, supported by a strong summer crop harvest and favourable monsoon conditions, raising hopes for further price moderation in the coming months.

A Reuters poll conducted between January 6-9, involving 43 economists, indicated that India's inflation, measured by the annual change in the consumer price index (CPI), dropped to 5.30 per cent in December, down from 5.48 per cent in November.

The forecasts for the data, which is scheduled to be released on January 13 at 1030 GMT, varied between 4.50 per cent and 5.60 per cent.

"The slow pace of easing in inflation is attributed to a delayed correction in vegetable prices given unseasonal rains in October and upward momentum seen in other food sub-segments like edible oils, cereals, with some cooling seen in December," wrote Kanika Pasricha, chief economic adviser at Union Bank of India, in the report.

Core inflation, which excludes volatile items like food and energy and is considered a more accurate reflection of domestic demand, was projected to be 3.70 per cent in December, based on the median estimate from 17 economists.

The Indian statistics agency does not release core inflation data. However, economists estimated it to be between 3.64 per cent and 3.70 per cent in November.

Although price increases have moderated slightly, inflation is not expected to reach the central bank's 4 per cent medium-term target until at least the second half of 2026, according to a separate Reuters poll.