Higher food prices nudged up India’s annual retail inflation in January to a three-month high of 6.52% from a 12-month low in December, showed government data on Monday. It was 5.72% in December and 6.01% in January 2022.
Inflation ran above the upper tolerance limit of 6% for the first 10 months of 2022 but fell below it in the last two, largely because of a fall in food inflation. Food price inflation, which accounts for nearly 40% of the CPI basket, rose to 5.94% in January from 4.19% in December. The prices of cereals and milk continued to rise. The previous high was 6.77% in October.
The retail inflation, measured by the annual change in the consumer price index (CPI), tracks the change in retail prices of goods and services, which households purchase for their daily consumption.
In the recent monetary policy announcement, Reserve Bank of India (RBI) Governor Shaktikanta Das said that in FY23, the inflation is expected to grow at 6.5%. In FY24, it is expected to fall to 5.3%. However, he noted that the inflation is still “sticky”.
The Reserve Bank has been mandated by the central government to ensure the retail inflation remains at 4% with a margin of 2% on either side.