Number of the week: 7.35 per cent

Business Standard
23rd January

7.35 per cent: The rate of consumer price index (CPI) -based inflation, or retail inflation, rose to 7.35 per cent in December, hitting a five-and-a-half-year high.

  • Retail inflation had stood at 5.54 per cent in November 2019, and at 2.18 per cent in December 2018. But, in December 2019, it breached the Reserve Bank of India's (RBI's) tolerance limit of 6 per cent.
  • The surge in CPI-based inflation was driven largely by food inflation, which shot up to 14.12 per cent in December from 10.01 per cent in November, primarily due to a rise in prices of vegetables and pulses. Onion and garlic saw triple-digit inflation in December.
  • Economists expect CPI-based inflation to moderate in January and February from the 7.35 per cent level seen in December 2019.
  • The high inflation print means that RBI is likely to remain in the pause mode for a long time now. We may also see steps in the Budget to tackle supply-side issues in agriculture.

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