According to government data, India’s annual retail inflation rate increased from 5.72 percent in December to 6.52 percent in January. For the first time in three months, CPI (Consumer Price Index) inflation exceeded the Reserve Bank of India’s target limit of 6%.
Annual Retail Inflation rose to 6.52 percent in January from 5..72 in December
6.77 percent, reached before in October.
One of the main causes of the rise in retail inflation is an increase in food costs, which increased to 5.94% in January from 4.19% in December. A whopping 40% of the basket of the consumer price index is made up of rising food prices.
Cereal costs increased 16.12% over the previous year, eggs cost 8.78% more, and milk cost 8.79% more. Vegetable prices dropped by 11.7%.
The Reserve Bank of India (RBI) increased the repo rate by 25 basis points last week, citing persistently high core inflation.
Reserve Bank mandated by Government to ensure retail inflation remains at 4 percent
The government has given the Reserve Bank the responsibility of ensuring that retail inflation stays at 4% with a margin of 2% on each side.
India’s rural and urban retail inflation rates were 6.85 per cent and 6.00 per cent respectively. Increased costs for spices, eggs, and cereals among others were a factor in the increase in food inflation in January.
In November 2022, retail inflation had reverted to the RBI’s target level.
The RBI left the door open for further tightening to control inflation last week after raising the repo rate to 6.50 percent for the sixth time since May.
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