Fading base effects and firmer food prices lift inflation, but disinflation trend remains intact
India’s consumer price inflation rose to 1.33 per cent in December, government data released on Monday showed, making it the 11th month in a row in which the inflation reading has come below RBI’s medium-term target of 2-4 per cent. The prices in December rose because of rising food prices along with a fading base effect.
The latest print compares with 0.71 per cent in November, which had pushed inflation to its lowest level in more than three years. Economists said the pickup reflects a broad-based rise across key food categories, even as headline inflation continues to signal a comfortable disinflationary phase.
Food inflation, which carries the highest weight in the CPI basket, showed sequential momentum in December, driven by rising prices across vegetables, cereals, pulses, and edible oils.
This came despite vegetable prices remaining sharply lower on an annual basis following strong harvests earlier in the year, indicating that the period of steep food price deflation may be nearing an end.
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