Edited By: Mohammad Haris
Last Updated: February 13, 2023, 19:01 IST
The Consumer Price Index (CPI)-based inflation had eased to 5.72 per cent in December.
CPI inflation in rural areas during January 2023 rose to 6.85 per cent, while that in urban areas hardened to 6 per cent
India’s retail inflation in January 2023 rose to 6.52 per cent on costly food items and fuel, according to the latest official data released on Monday. With this, the inflation has breached the RBI’s upper tolerance limit of 6 per cent after remaining under it for the previous two consecutive months of November and December. Inflation in rural areas during January 2023 rose to 6.85 per cent, while that in urban areas hardened to 6 per cent.
In December 2022, the Consumer Price Index (CPI)-based inflation had eased to 5.72 per cent. In November 2022, it had fallen to 5.88 per cent. The retail inflation came under the RBI’s 2-6 per cent band in November with 5.88 per cent rate after remaining beyond it for 10 months consecutively.
According to the latest data from the National Statistical Office (NSO), inflation in the food basket, or the Consumer Food Price Index, accelerated to 5.94 per cent in January 2023, compared with 4.19 per cent in December 2022. The food inflation is responsible for nearly half the CPI basket.
In October, India’s retail inflation had eased to a three-month low of 6.77 per cent. In September, the inflation had accelerated to a five-month high of 7.41 per cent. Before that, the retail inflation had stood at 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 at Kotak Institutional Equities, said, “The January 2023 CPI inflation print at 6.5 per cent is much ahead of our estimate of 6.1 per cent. Much of this sharp increase in inflation is due to high cereals price inflation and partly due to unfavourable base. However, with cereals prices staying on the upside, inflation could remain around the 5.5-6 per cent mark in the near term.”
Rakshit added that the hawkish tone of the RBI in the February policy seems justified with both headline and core inflation (at 6.4 per cent in January) remaining sticky and elevated. “The RBI is unlikely to change its stance in the April policy while a 25 bps hike is a distinct possibility now (compared to a larger probability of pause earlier).”
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