India's Retail Inflation Rises to 1.33% in December, Stays Below RBI Target
India's retail inflation increased to 1.33% in December from 0.71% in November, according to Ministry of Statistics data released Monday. The figure came below Bloomberg analyst expectations of 1.56% and follows October's record low of 0.25%. Inflation has stayed below RBI's 4% target for four consecutive months, prompting the central bank to lower its fiscal year forecast to 2% from 2.6%.
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India's retail inflation showed a marginal uptick in December while remaining comfortably below the Reserve Bank of India's target range, according to official data released on Monday. The Consumer Price Index (CPI) based inflation reached 1.33% in December, marking an increase from the previous months but staying within manageable levels.
December Inflation Data
The Ministry of Statistics released the December CPI data showing inflation at 1.33%, which came in below market expectations. Analysts tracked by Bloomberg had estimated the inflation rate at 1.56% for the month.
| Month | CPI Inflation Rate |
|---|---|
| December | 1.33% |
| November | 0.71% |
| October | 0.25% |
The October figure of 0.25% represents the lowest-ever inflation rate recorded by the government, highlighting the significant moderation in price pressures during the recent period.
RBI Target and Policy Implications
Retail inflation has remained well below the Reserve Bank of India's 4% target and the tolerance band of +/-2% for the fourth straight month. This extended period of low inflation has continued for a second consecutive quarter, providing the central bank with policy flexibility.
The sustained low inflation environment has prompted the RBI to revise its inflation projections. The central bank has slashed its inflation forecast for the current fiscal year to 2% from the earlier estimate of 2.6%.
Market Context
The December inflation reading, while higher than the previous two months, continues to reflect the broader trend of subdued price pressures in the Indian economy. The consistent performance below the RBI's target range suggests that inflationary concerns remain limited in the near term, allowing policymakers to focus on other economic priorities while maintaining price stability.
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