December retail inflation slows to three-month low

Some moderation in vegetable and fruit prices eased December retail inflation to three-month low of 9.87 per cent, giving the Reserve Bank of India more leeway to manage interest rates. Inflation as measured by the Consumer Price Index (CPI) for November has been revised marginally downwards to 11.16 per cent from preliminary estimate of 11.24 per cent.

Vegetable prices on annual basis rose 38.76 per cent in December, a slower pace than 61.6 per cent recorded in the previous month, as per the official data released today.

Fruit prices rose 14.64 per cent compared to 15 per cent in November. Pulses were dearer by 2.15 per cent, cereals by 12.14 percent and milk products by 9.87 per cent in December. Protein-rich items such as eggs, meat and fish became dearer by 12.64 per cent in December as compared to 11.96 per cent in the previous month.

Inflation in the food and beverages segment was 12.16 percent as against 14.72 per cent recorded in November. The retail inflation was in double digits in October and November.

The data showed that the provisional inflation for rural and urban areas for December was 10.49 per cent and 9.11 per cent, respectively. Data on inflation based on the wholesale price index is scheduled for release tomorrow.

The Reserve Bank, scheduled to announce its monetary policy review on January 28, has kept policy rates unchanged expecting that inflation, both consumer and retail, would ease. The key policy rate (repo) was hiked twice between September and November to check inflation.

With industrial growth slowing to six-month low in November, there has been a strong demand from the industry for a reduction in policy rates.