CPI Inflation hits seven-month high of 6.01% in January 2022, breaches RBI's upper limit target

15 Feb 2022 , 10:00 AM

India’s consumer price index (CPI) or retail inflation has breached the upper tolerance limit for RBI’s inflation target in the medium term as it reached a seven-month high in January 2022. CPI comes at 6.01% in January this year rising from the previous month due to a huge spike in food inflation.

CPI inflation was at 5.66% in December 2021 and 4.06% in January 2021.

Consumer Food Price Index (CFPI) increased to a 14-month high of 5.43% in January 2022 against 4.05% and 1.96% in December and January last year.

On category-wise performance, in January 2022, the inflation rate of Food and beverages was at 5.58%, while the inflation rate of Pan, tobacco and intoxicants stood at 2.45%.  Clothing and footwear inflation was at 8.84%, housing inflation at 3.52% and fuel & light was at 9.32%. Miscellaneous inflation was at 6.55%.

The Price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During January 2022, NSO collected prices from 99.7% villages and 98.2% urban Markets while the Market-wise prices reported therein were 89.3% for rural and 93.3% for urban.

RBI decides monetary policy outcomes to achieve the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent while supporting growth.

In the last bi-monthly monetary policy for FY22, announced earlier this month, RBI announced that CPI inflation for 2022-23 is projected at 4.5 per cent with Q1:2022-23 at 4.9 per cent; Q2 at 5.0 per cent; Q3 at 4.0 per cent; and Q4:2022-23 at 4.2 per cent, with risks broadly balanced.

RBI in the policy statement, on inflation, said, “Prospects of a good Rabi harvest add to the optimism on the food price front. Adverse base effect, however, is likely to prevent a substantial easing of food inflation in January. The outlook for crude oil prices is rendered uncertain by geopolitical developments even as supply conditions are expected to turn more favourable during 2022. While cost-push pressures on core inflation may continue in the near term, the Reserve Bank surveys point to some softening in the pace of increase in selling prices by the manufacturing and services firms going forward, reflecting subdued pass-through.