Retail inflation fell to a three-month low of 9.87 per cent
Retail inflation at 3-month low of 9.87% due to softening of vegetable prices.
By : DC Correspondent
Update: 2014-01-14 09:14 GMT
New Delhi: Giving much-needed breathing space to the government and RBI, retail inflation fell to a three-month low of 9.87 per cent in December, due to softening of vegetable prices. Retail inflation, which is based on consumer price index (CPI), was in double digits at 11.16 per cent in November.
The fall in inflation could give some leeway to the RBI to reorient its monetary policy to boost the slowing economic growth. Industrial production had contracted for the second month in a row by 2.1 per cent in November after shrinking by 1.57 per cent in October.
Recently, RBI had started focusing on retail inflation while formulating its monetary policy reform. Against market expectations, RBI had refrained from hiking interest rates during the last monetary policy review hoping that inflation will fall.
Economists expect the retail inflation to fall in January too. “In January we expected a further fall in inflation as vegetables prices have fallen further during the month,” said CRISIL chief economist D.K. Joshi.
He said that there was no surprise for RBI in the fall in retail inflation as the central bank had already factored it.
In December, vegetable inflation was still high at 38.76 per cent. But it was lower than in November, when food inflation had touched 61 per cent. Similarly fruit prices rose 14.64 per cent in December compared to 15 per cent in November.
Cereals and products prices rose by 12 per cent in December. Egg, fish and meat became costlier by 12.64 per cent during the month. However, sugar prices fell by five per cent in December.
Meanwhile, the Sensex soared to its biggest gain in seven weeks and the rupee soared to its highest level in a month on Monday as the markets seem to have got an inkling that the December consumer price index was coming lower than it was November.
The Sensex closed up 375.72 points at 21,134.21, the first positive robust closure in 2014 while the Nifty gained 101.30 points at 6,272.75.