After two months of relief, the headline retail inflation breached the Reserve Bank of India’s upper tolerance limit again in January rising to 6.52 per cent fuelled by a surge in fuel and food prices, as per the government data released on Monday.
The price rise is pinching people in rural India more. The Consumer Price Index (CPI) based retail inflation in rural areas surged to 6.85 per cent in January from 6.05 per cent in the previous month, while for urban areas it rose to 6 per cent during the month under review as compared to 5.39 per cent in December 2022.
The CPI-based inflation, which the RBI tracks for its policy action, has breached the upper tolerance band after two months of relief.
After remaining above the RBI’s upper tolerance limit of 6 per cent for 10 months in a row, the retail inflation eased to 5.88 per cent in November and declined further to 5.72 per cent in December. However, it has again jumped above the 6 per cent mark.
January inflation print, which comes less than a week after the announcement of monetary policy, will put renewed pressure on the RBI to further increase policy rates. On Feb 8, the RBI hiked policy repo rate by 25 basis points to 6.5 per cent, the highest level in almost four years.
“Headline inflation has moderated with negative momentum in November and December 2022, but the stickiness of core or underlying inflation is a matter of concern,” RBI Governor Shaktikanta Das said in his monetary policy statement last week.
Inflation in food items, which account for nearly 40 per cent of the CPI basket, jumped to 5.94 per cent in January from 4.19 per cent in the previous month, data released by the National Statistical Office (NSO) showed.
In rural areas, food prices increased by 6.65 per cent year-on-year in January, while the food inflation in urban areas stood at 4.79 per cent.
Cereals became costlier by 16.12 per cent during the month under review on a year-on-year basis while vegetables became cheaper by 11.70 per cent. Prices of spices soared by 21.09 per cent in January 2023 when compared with the same month last year.
Fuel and light become costlier by 10.84 per cent while the prices of clothing and footwear surged by 9.08 per cent in January on a year-on-year basis. Household goods and services become costlier by 7.26 per cent; education by 5.83 per cent; health by 6.36 per cent; and personal care and effects by 9.57 per cent during the month under review.
The price data are collected from selected 1,114 urban markets and 1,181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO on a weekly roster, the Ministry of Statistics and Programme Implementation said in a statement.