Inflation quickens to 5.21% on food costs 

Inflation quickens to 5.21% on food costs 

Context

December retail inflation hits 17-month high

What

Inflation as measured by the Consumer Price Index accelerated to a 17-month high of 5.21% in December, from November’s 4.88% as food, housing and fuel costs continued to strengthen.

RBI Response

Economists said quickening retail inflation would likely lead the Reserve Bank of India (RBI) to retain its cautious monetary stance.

The present indications are that the RBI will go for long pause in its rate policy.

Factors

• Inflation is being largely driven by housing and vegetables
• Out of these two, vegetables are a seasonal effect and housing has a large weightage in the index
• A more sustained influence is that of rising fuel prices.

Housing segment inflation accelerates

The housing segment saw inflation accelerate for the sixth straight month in December to 8.25%, from 7.36% in Novembe

Inflation in food and beverages segment increased

Inflation in the food and beverages segment quickened to 4.85%, from 4.41%

Inflation in vegetables segment the fastest

Within this, inflation in the vegetables segment touched 29.1%, the fastest pace of gains among all items in the food groups.

Easing inflation in clothing and footwear

Inflation in the clothing and footwear segment eased in December to 4.8%, from 5.04% in the previous month