edited by: Mohammad Haris
Last Update: February 13, 2023, 19:01 IST
Inflation based on the Consumer Price Index (CPI) had come down to 5.72 per cent in December.
CPI inflation in rural areas rises to 6.85 per cent during January 2023, while it hardens to 6 per cent in urban areas
India’s retail inflation rose to 6.52 per cent in January 2023 on costlier food items and fuel, according to the latest official data released on Monday. With this, inflation has crossed the RBI’s upper tolerance limit of 6 per cent after remaining below it for the last two months of November and December. Inflation in rural areas rose to 6.85 per cent during January 2023, while it hardened to 6 per cent in urban areas.
In December 2022, the consumer price index (CPI) based inflation came down to 5.72 per cent. In November 2022, it had come down to 5.88 per cent. Retail inflation came in November after remaining under the RBI’s 2-6 per cent band at 5.88 per cent for 10 consecutive months.
Inflation in the food basket or consumer food price index is set to rise to 5.94 per cent in January 2023, as against 4.19 per cent in December 2022, according to the latest data from the National Statistical Office (NSO). Food inflation is responsible for this. for about half the CPI basket.
In October, India’s retail inflation came down to a three-month low of 6.77 per cent. Inflation had reached a five-month high of 7.41 per cent in September. Earlier, retail inflation was 7.04 per cent in May, 7.01 per cent in June, 6.71 per cent in July and 7 per cent in August.
Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, said, “The January 2023 CPI inflation print at 6.5 per cent is much higher than our estimate of 6.1 per cent. Much of this sharp increase in inflation is due to higher grain price inflation and partly due to an unfavorable base. However, inflation may remain around 5.5-6 per cent in the near term on account of firming up of cereal prices.
Rakshit said the RBI’s hawkish tone in the February policy seems justified with headline and core inflation (at 6.4 per cent in January) remaining firm and elevated. “The RBI is unlikely to change its stance on the April policy, while a 25 bps hike is now a distinct possibility (compared to a larger possibility of a pause earlier).”
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