Consumer price inflation at a 17-month high of 5.12% in December

news
13 January 2018

Consumer price inflation based on the consumer price index (CPI) hit a 17-month high of 5.12 per cent year-on-year in December, showing a rising trend, partly due to the effect of a lower base in the wake of last year's demonetisation.

Consumer price inflation stood at 15-month high of 4.88 per cent In November while it was at a low 3.41 per cent in December 2016

Higher inflation in December was due to hardening vegetable prices (29 per cent) and rising cost of housing (8.25 per cent) after the government's decision to increase house rent allowances for central government employees in line with the 7th Pay Commission recommendations.

The rising trend in inflation although supports a pick-up in industrial production, has dashed hopes of monetary easing in the near future.

The Reserve Bank of India (RBI) maintained a neutral stance in its December monetary policy review, citing the risk of rising inflation.

The current levels of inflation are far higher than the Reserve Bank of India's (RBI) 4.0 per cent medium-term target

The rate of retail food inflation during December stood at 4.49 per cent on an year-on-year basis, against 4.35 per cent the previous month.

The government is releasing consumer price inflation data since January 2012 based on combined data for rural and urban consumers.

Consumer price inflation for the rural areas stood at 5.27 per cent in December 2017 against 4.7 per cent in November and 3.83 per cent in December 2016.

For the urban areas, the consumer price inflation stood at 5.09 per cent in December 2017 against 4.9 per cent in November 2017 and 2.90 per cent in December 2016.

Food price inflation (combined) stood at 4.49 per cent in December 2017 against 4.42 per cent in November and 1.37 per cent in December 2016.

Food price inflation for rural areas stood at 5.08 per cent in December 2017 against 4.1 per cent in November and 4.35 per cent in December 2016.

Food price inflation for urban areas stood at 4.71 per cent in December 2017 against 4.9 per cent in November and 0.15 per cent in December 2016.

RBI's Monetary Policy Committee (MPC) has a mid-term inflation target of 4 per cent





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