CONSUMER food price inflation has hit 14.12 per cent year-on-year in December 2019, the highest after it touched 17.89 per cent reached more than six years ago in November 2013.
Central bank chief Shaktikanta Das said just last week that price stability is the Reserve Bank of India's primary objective as continuing high inflation disproportionately affects India's poorest. Prices of eggs increased by 8.7%, and prices of food and beverages overall increased by 12.16%.
The rise in food inflation over the last three months or so has been viewed as transitory, driven largely by the damage to the kharif crop from prolonged unseasonal rains during September to early November.More news: Canada business chief lashes Trump over Iran plane crash
Inflation rose swiftly in December primarily on account of higher food prices. This also marks a spike in inflation from November when the retail inflation was 5.54 per cent.
Icra principal economist Aditi Nayar said the revision in rail fares, uptick in prices of some categories of automobiles and an unfavourable base effect may contribute to a further uptick in the core inflation to around 4 per cent in the ongoing month.
The central bank, which tracks consumer inflation data primarily while formulating its monetary policy, reduced the repo rate by a total 135 basis points to 5.15 per cent in 2019. However, core inflation stood at 3.7%. "Even so, our estimates suggest inflation will likely remain above 6.5% in 4QFY20 and could constrain a rate cut in February", financial services firm Edelweiss said in a statement. In July 2014, the CPI was 7.39 per cent, a tad higher than December 2019's number of 7.35 per cent.More news: Islanders Fall In Overtime To Bruins 3-2
With prices of onions and garlic among others soaring to record highs, vegetables recorded an inflation rate of 60.50% in December, as against a price increase of 35.99% in November. "The latter should be reflecting the recent increase in mobile telephone charges, although the historical correlation of increase in ARPU with CPI has been weak", said Sreejith Balasubramanian, Economist - Fund Management, IDFC AMC on the latest CPI data.
The RBI is responsible for framing India's monetary policy, and sets interest rates to keep inflation in control while pushing for growth.
Going ahead, the chamber will look forward to the continuation of softer stance of monetary policy by the RBI to spur investments and consumption demand in the coming times.More news: Macron at summit to boost West Africa anti-terror fight