A view of a vegetable market in New Delhi. File
| Photo Credit: Sushil Kumar Verma
India’s retail inflation accelerated to a four-month high of 5.7% in December 2023, from 5.55% a month earlier, led by an uptick in food prices that rose 9.5% nationally and breached the 10%-mark for urban consumers.
Although rural consumers faced a slightly lower uptick in food prices at just under 9%, they faced higher overall inflation at nearly 6% compared to 5.5% faced by their urban peers in December.
Despite a sharper year-on-year uptick in prices, the Consumer Price Index (CPI) declined 0.32% from November 2023 levels, with the Consumer Food Price Index easing by 0.9%.
While price rise hardened in December, the average consumer price inflation for the October to December quarter has been 5.4%, moderately lower than the Reserve Bank of India’s projection of 5.6%.
Within the food basket, inflation picked up in pulses (20.73%), vegetables (27.6%), fruits (11.14%), and Sugar (7.14%), while it was just fractionally lower for cereals and spices, which continued to record steep inflation of 9.9% and 19.7%, respectively, in December.
Inflation continued to ease in the case of milk (5.1%), meat and fish (1.15%) and egg (4.4%). Meanwhile, the deflation in edible oil prices which had surged in 2022 after the Ukraine conflict, remained virtually unchanged from November levels at 15%.
Interestingly, while consumer food prices rose faster in urban areas at 10.4%, rural consumers witnessed greater inflation in some products such as cereals (10.3%), milk, spices and sugar.
Beyond food, most items saw lower inflation than November. Fuel and light prices fell 1% year-on-year, compared to a 0.8% dip in November. Transport and Communication prices rose 2%, slightly below November levels, while inflation in personal care and effects eased from 7.8% to 7.3% in December.
As many as seven States recorded inflation of over 6% or beyond the RBI’s tolerance threshold for inflation, led by Odisha (8.7%), Gujarat (7.1%), Rajasthan (6.95%) and Haryana (6.7%). Karnataka and Telangana recorded an uptick of 6.65% each, followed by Maharashtra at 6.1%, as per calculations by the National Statistical Office (NSO) which computes inflation rates for 22 major States.
Besides these States, Punjab, with an inflation rate of 5.95%, and Bihar (5.9%), were the only two to clock a higher price rise than the national average of 5.69% in December.
The uptick in inflation in December was entirely led by the food and beverages segment, with vegetables being the main culprit, said ICRA chief economist Aditi Nayar. “The outlook for the inflation for certain items like rice, wheat and pulses remains somewhat vulnerable, given the estimated fall in annual kharif production, as well as the lag lag in the ongoing rabi sowing season amid El Niño conditions,” she cautioned.