Retail Inflation Shoots To 7.35% In December, Highest Since July 2014; Breaches RBI Upper Limit

Similarly, on a year-on-year (YoY) basis, the Consumer Price Index (CPI) for December was higher than the corresponding period of last year when retail inflation stood at 2.11 per cent.

Vegetable inflation rose to 60.5 per cent in December compared to 36 per cent in November. (Representative Image/ Getty)

New Delhi: Retail inflation for the month of December 2019 witnessed a massive hike of 7.35 per cent to 5.54 per cent a month ago, breaching Reserve Bank of India's (RBI) upper-limited target. Similarly, on a year-on-year (YoY) basis, the Consumer Price Index (CPI) for December was higher than the corresponding period of last year when retail inflation stood at 2.11 per cent. This is the highest retail inflation rate witnessed since July 2014 when retail inflation was at 7.39 per cent, triggering further growth concerns amid ongoing economic slowdown across the country. According to the data furnished by the National Statistical Office (NSO), the Consumer Food Price Index (CFPI) inflated to 14.12 per cent during the month under review from an expansion of 10.01 per cent in November 2019 and (-) 2.65 per cent rise reported for the corresponding period of last year. The data assumes significance as the RBI in its last monetary policy review maintained the key lending rates on account of rising retail inflation. The central bank is expected to keep the rates intact during the last monetary policy review for 2019-20 to be held in February. While core inflation has increased marginally in December to 3.7 per cent, the real worry for the Central bank and government is the rate of food (vegetable) inflation, which is the key trigger behind the steep rise in inflation in December 2019. Last wee, RBI Governor Shaktikanta Das had said the central bank is focusing on strengthening regulation and supervision to develop a robust framework of financial stability where banks and NBFCs are able to fulfil the expectations of society for high growth with financial stability. The NSO data also pointed out that food inflation has jumped significantly to 14.12 per cent from 10.01 per cent in November, 2019. It is worth mentioning that vegetable inflation rose to 60.5 per cent in December compared to 36 per cent in November. The central government has mandated the Reserve Bank of India to keep inflation in the range of 4 per cent with a margin of 2 per cent on the either side. With just days for the Modi government to present its second Union Budget on February, both Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman have stepped up their efforts to revive the struggling economy. Last week, PM Modi and Sitharaman held back to back meetings with industry experts, economists and council of minister seeking their suggestions for the upcoming Budget and economy. The Finance Minister had said inflation has been under control, macro economic fundamentals absolutely strong, FDI inflow has been strong, foreign exchange reserve is at record high. Besides, the government announced Rs 100 lakh crore for infrastructure sector and provided relief to real estate sector. She had also drove home the point of her achievements that included the repo rate cuts, lower interest rates, low inflation, and higher FDI as well. The performance report card of each ministry under the respective Cabinet ministers will be considered for the upcoming Cabinet reshuffle which may take place post the Union Budget.