Retail inflation drops to 4.59 pc in December 2020

Retail Inflation declines to 4.59 per cent in December from 6.93 per cent in November

Wholesale price-based inflation slowed to 1.22 per cent in December on lowering of food prices, according to government data released on Thursday. Retail inflation based on the Consumer Price Index (CPI) was 6.93 per cent in November. The urban CPI was 5.19 per cent in December 2020, compared with 5.19 per cent in November last.

Rent inflation accounted for approximately 40% of the core CPI, he said.

"Hence, once the pent up demand is exhausted, it will be critical to ensure demand upswing to see the real benefit of moderate inflation", said Sanjay Kumar, chief executive officer and managing director, Elior India. "We keep looking at the current forecast and then they change dramatically when one series of number come either on food inflation or on other core inflation elements", added Narayan.

Clothing and footwear inflation rose to 3.5% in December, from 3.4% in November.

Bird flu has also not brought down retail inflation. The recent upward move in crude prices can be a potential dampener.

However the "core" index excluding food and energy rose 0.1 per cent in December, and for 2020 the increase was 1.6 per cent - far below the central bank's 2 per cent goal.

"Within that, fuel and light inflation rose to 3.0% from 1.6%, and petrol and diesel inflation to 11.4% from 10.0%". This is the lowest point in retail inflation since March previous year, when it was pegged at 5.84 per cent, marking a return to the comfort range of 2-6 per cent prescribed by the Reserve Bank of India (RBI) for the first time in nine months. "However, the RBI will still need to be watchful of the inflation trajectory going ahead with global commodity prices on the rise and the favourable base effect starting to taper off from January 2021", the rating agency has said.