Retail inflation rises to 5.7% in December

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Last Updated14/01/2024

India's retail inflation increased to a four-month high of 5.7% in December 2023, up from 5.55% in the previous month.
The uptick in December's inflation was driven by the food and beverages segment, particularly vegetables.
Food prices recorded a national increase of 9.5%, with urban consumers experiencing a rise of 10.42%.
Urban consumers faced a higher inflation rate of 6%, while rural consumers experienced slightly lower food price hikes but a higher overall inflation rate of nearly 6%.

A long-term increase in the general price level of goods and services in a given economy.
It considers the pricing of most everyday or standard products and services.
- These include food, clothes, housing, recreation, transportation, consumer staples, etc.
It is positive when it helps improve consumer demand and consumption, and operate economic growth.
Even inflation is meant to keep deflation in check and is a drag on the economy.

It is a central banking policy that focuses on altering monetary policy to attain a set annual inflation rate.
Assumption: Preserving price stability, which is achieved by managing inflation, is the greatest way to generate long-term economic growth.
Under the RBI Act, 1934, the Central Government, in consultation with the RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in five years.
It provides for the constitution of a six-member Monetary Policy Committee (MPC) to determine the policy rate required to achieve the inflation target.
Currently, the RBI aims to keep inflation at 4% but will tolerate inflation between the range of 2% to 6%.

Also known as Consumer Price Index (CPI) inflation.
It is the rate at which the prices of goods and services that consumers buy for personal use increase over time.
It measures the change in the cost of a basket of goods and services that are typically purchased by households.
- These include food, clothing, housing, transportation and medical care.

It is the change in the costs of goods and services but does not include those from the food and energy sectors.
Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly.