Retail inflation rises to 3-month high of 6.52 per cent in January

By Team Newsable | First Published Feb 13, 2023, 6:29 PM IST

Inflation rate for the food basket was at 5.94 per cent in January, up from 4.19% in December. The previous high was 6.77 per cent in October. RBI has been mandated by the central government to ensure the retail inflation remains at 4% with a margin of 2% on either side.

Retail inflation breached the RBI’s comfort zone and rose to a three-month high of 6.52 per cent in January, mainly on account of a spike in food prices, as per government data released on Monday.

According to the Consumer Price Index (CPI), the inflation rate was 5.72 percent in December and 6.01 percent in January 2022. The food basket's inflation rate increased from 4.19 percent in December to 5.94 percent in January. It may be noted that the inflation rate for vegetables contracted by 11.70 per cent, compared to 15.08 per cent last month. Meanwhile, the inflation rate for cereals increased to 16.12 per cent in January from 13.79 per cent in December.

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The previous high was 6.77 per cent in October.

Last week, the RBI (Reserve Bank of India) hiked the repo rate by 25 basis points, noting that core inflation remained high. The central government has instructed the Reserve Bank of India to make sure that retail inflation stays at 4% with a margin of 2% on each side.

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After decreasing for three straight months, retail inflation spiked in January, according to data provided by the National Statistical Office (NSO) on Monday. A sharper rise in inflation could be a worrisome indicator for the Indian economy as it would not only hurt the vast middle class population, but also hinder demand growth. Furthermore, because the central bank will be compelled to tighten monetary policy even further in April, it will also directly affect key interest rates.

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