Retail inflation slows to 18-month low of 2.19% in Dec

The Consumer Price Index (CPI) based inflation rate went down to 2.19 per cent in December from 2.33 per cent in the corresponding previous year, said a government data.

The Consumer Price Index (CPI) based inflation rate went down to 2.19 per cent in December from 2.33 per cent in the corresponding previous year, said a government data. This rate happens to be the lowest since June 2017.
 
Now, it's interesting to see whether the Reserve Bank of India (RBI) cuts repo rate during its bi-monthly policy review next month.  Monetary Policy Committee (MPC) takes CPI and inflationary expectations into cognizance before deciding change in the policy rate, which is better known as repo rate. 
 
Since the rate is continuously below 4 per cent, there is pressure on MPC to lower the rate. According to the agreement between the government and the RBI, the targeted retail inflation is 4 per cent with movement of 2 per cent in both directions. This means inflation should be between 2 and 6 per cent.
 
Retail food prices in December were down 2.51 percent from a year earlier, compared with a 2.61 percent fall a month earlier. The figures indicate that rural incomes remain under pressure while consumers benefit from easing inflation.
 
Source: Businessline, media reports

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