The Telegraph
Tuesday , January 14 , 2014
CIMA Gallary

First signs of hope in new year
December retail inflation slows

New Delhi, Jan. 13: Retail inflation in December eased to 9.87 per cent as vegetable inflation fell, giving some room to the Reserve Bank of India to manage interest rates.

The rise in retail prices at 9.87 per cent, as brought out by the Central Statistical Organisation, is slower than the 9.92 per cent forecast in a Reuters poll.

The consumer price index-based inflation had touched a high of 11.16 per cent in November. The rate of price rise came down to single digits in December after two months.

The moderation was largely driven by a fall in vegetable inflation, which came down to 38.76 per cent in December compared with 61.60 per cent a month ago. This helped food inflation to ease to 12.16 per cent in December from 14.72 per cent in November.

Still, prices of cereal, milk and eggs are rising, which are likely to keep the overall inflation elevated.

Pulses were dearer by 2.15 per cent, cereals by 12.14 per cent and milk products by 9.87 per cent in December. Prices of protein-rich items such as eggs, meat and fish moved higher by 12.64 per cent in December compared with 11.96 per cent in the previous month.

Inflation in the food and beverages segment was 12.16 per cent against 14.72 per cent in November.

However, in rural areas, the inflation still remained in double digits at 10.49 per cent, though substantially down from 11.66 per cent in November. In urban areas, the rate of price rise fell to 9.11 per cent from 10.53 per cent.

Inflation data based on the wholesale price index are scheduled for release tomorrow.

The RBI, scheduled to announce its monetary policy review on January 28, has kept policy rates unchanged expecting that inflation, both consumer and retail, would ease. It had raised the key policy rate twice between September and November to check inflation.

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