Retail inflation touches 7.35% in December, highest since July 2014

The consumer price index (CPI) continued to breach the Reserve Bank of India's (RBI's) medium-term target of 4 per cent for third consecutive month in December 2019 at 7.35 per cent, which is highest since July 2014. The spike in retail inflation is attributed to high food prices. This also marks a spike in inflation from November when the retail inflation was 5.54 per cent. In July 2014, the CPI was 7.39 per cent, a tad higher than December 2019's number of 7.35 per cent.

CPI was 2.11 per cent in December 2018.

As per the government data, the food inflation rose to 14.12 per cent in December as against (-) 2.65 per cent in 2018. It was 10.01 per cent in November 2019.

The CPI inflation, also known as retail inflation, hit a 40-month high of 5.54 per cent in November, from 4.62 per cent in October. It stood at 6.07 per cent in July 2016. Vegetables inflation rose to 60.5 per cent in December from 36 per cent in November.

In its December policy review, the RBI had kept policy rates unchanged for the first time this year, on higher inflation expectations.

The central bank expects food inflation to remain high in the next six months. It has also revised the inflation projection from 3.5-3.7 per cent in the second half of 2019-20 to 4.7-5.1 per cent.

Also read: Onion effect! Retail inflation touches 5.54% in November; highest in more than 3 years

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Edited by Manoj Sharma