Retail inflation at 4 month high, industry shows muted growth

New Delhi: Retail inflation rose to a four month high in December, driven by food articles, although prices of cereals and vegetables decelerated compared to the previous month, official data showed on Friday. Cereals and vegetables were cheaper in December,compared to November but there was no let up in the increase of overall food prices.

(PTI) Consumer prices soared to 5.69% in December from a year ago, higher than November’s 5.55%, but remained within the Reserve Bank’s upper limit of 6% for the fourth straight month. Yet, rising prices, which snapped a three month decline in November, will continue to pressure policymakers and households alike.

Wrap up the year gone by & gear up for 2024 with HT! Click here Cereals and vegetables were cheaper in December, compared to November but there was no let up in the increase of overall food prices. Food price inflation leapt to a staggering 9.53% in December, compared to 8.70% in the previous month.

Higher costs of food impact poorer households more than the well off since the former tend to spend a larger share of their of the monthly budget on food items. Data released by the National Statistics Office on Friday separately showed the Index of Industrial Production (IIP) in the world’s fifth largest economy grew a tepid 2.4% in November, after rising to a 16 month high in the previous month.

IIP serves as barometer of economic activity. Mining output grew by 6.8%, while manufacturing expanded by a muted 1.2%. Cereal prices registered a growth of nearly 10%, while prices of oils and fats declined by 14.98%. Vegetable inflation stood at 27.64% in December. Pulses inflation was at 20.73% from a year ago, the data showed.

Also Read: Number Theory: What November’s headline inflation figures don’t show India has been battling high cereal prices after extreme weather and heatwaves dented yields for two straight years. Grain prices continued their upward streak despite a raft of policy measures, including a ban on the export of rice and wheat.

The Modi government, which faces a general election in spring this year, has released millions of tonne of grains from state held stocks to cool grain prices. The central bank, which has kept the key policy rate unchanged over the past four meetings, expects inflation to average 7% in 2023 24, higher than 6.7% recorded in the previous year.

India is vulnerable to food price shocks from extreme weather events and global factors despite a recent moderation in prices, RBI governor Shaktikanta Das has repeatedly warned, stating that the central bank will continue to be vigilant against “sources” of inflation. “In these circumstances, monetary policy remains watchful and actively disinflationary to progressively align inflation to the target, while supporting growth,” Das had said in November.

In the same month, Das repeated the warning when he told a conference in Japan that the world’s fifth largest economy could face “recurring and overlapping” food price shocks. Unlock a world of Benefits with HT! From insightful newsletters to real time news alerts and a personalized news feed – it's all here, just a click away! Login Now! Get Latest India News and Earthquake Today along with Latest News and Top Headlines from India and around the world SHARE THIS ARTICLE ON Share this article Share Via Copy Link ABOUT THE AUTHOR Zia Haq Zia Haq reports on public policy, economy and agriculture.

Particularly interested in development economics and growth theories. ...view detail Retail Inflation.