Retail inflation rises to 7.59% in January, highest since May 2014

Retail inflation rose to 7.59% in January since May 2014 when the inflation was 8.33%.

The CPI-based inflation jumped to over five-and-a-half-year high of 7.59% on persistently high prices of vegetables, pulses and protein-rich meat and fish, government data showed.

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In December 2019, inflation stood at 7.35% and 1.97% in January 2019.

The overall food inflation during January this year stood at 13.63%, slightly lower than 14.19% in the previous month, showed the data released by the National Statistical Office under the Ministry of Statistics and Programme Implementation.

“The internals of the food inflation are worrying, given a broad-based uptick across categories that tend to be sticky, such as proteins, and a narrower-than-expected reduction in inflation for vegetables,” said Aditi Nayar, principal economist, ICRA.

“Moreover, the fairly broad-based rise in the core inflation to 4.1% in January 2020, driven by various services, is a cause for concern,” she added.

Nayar added that regardless of the level of retail inflation, the stance of the RBI for the monetary policy is likely to be retained as accommodative, for as long as the MPC considers the output gap to be negative. “The timing and magnitude of the next rate cut will depend on how quickly inflation appears to be reverting back towards 4%.”

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