Decline in vegetable prices a relief amidst higher inflation number for January

14 Feb 2023 , 08:48 AM

According to data from Ministry of Statistics and Programme Implementation, retail inflation in India, which had been declining for the previous two months, increased in January to 6.52%.

A spike was anticipated because of a negative base impact from the previous year. However, January’s far higher-than-anticipated annual growth rate of 6.52% compared to December’s 5.72% was mainly driven by rising food costs, which make up roughly 40% of the Consumer Price Index (CPI) basket.

The RBI is anticipated to keep inflation within a 2–6% range. To stop inflation, it has been boosting lending rates. The policy repo rate was raised by a quarter of a percentage point by the RBI last week.

Vegetable prices decreased y-o-y by 11.70% in January. They decreased by 15.08% the previous month. Fuel and lighting prices decreased by 10.84% in January. They had decreased by 10.97% in the previous month.

As supply-side disruptions in the post-pandemic globe that was merely in the early stages of recovering from economic shocks exacerbated by the unpredictable nature of the Russia-Ukraine war, higher inflation has been a concern for central banks around the world, including India.

As the worst of the pricing pressures were believed to be behind us, the RBI reduced India’s inflation prediction for this fiscal year; nonetheless, Governor Shaktikanta Das raised concerns about the stickiness of core inflation at the Monetary Policy Committee meeting on February 8.

Retail inflation is expected to be 6.5% for FY23 and 5.7% for Q4 according to the RBI. Retail inflation is anticipated to be 5.3% in FY24, with Q1 and Q2 readings of 5%, 5.4%, 5.6%, and 5.8%, respectively.

The RBI has raised the short-term lending rate by 225 basis points since May of last year in an effort to keep inflation under control.

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