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Retail inflation spikes to over 5-year high of 7.35% in December

NEW DELHI: Retail inflation based on consumer price index (CPI) accelerated to about five-and-half year high of 7.35 per cent in December last year as against 5.54 per cent in November mainly on account of rising vegetable prices, government data showed on Monday. The number stood at 2.11 per cent in December 2018.

The previous high in retail inflation was witnessed at 7.39 per cent in July 2014.

Spike in inflation in the vegetable segment was 60.5 per cent during the month compared to December 2018. Food inflation rose to 14.12 per cent in December as against (-) 2.65 per cent in the same month of 2018. It was 10.01 per cent in November 2019.

This is the third straight month when the retail inflation figure exceeded the Reserve Bank of India’s (RBI’s) medium-term target of 4 per cent.

The Reserve Bank mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.

Overall retail inflation based on Consumer Price Index (CPI) was 2.11 per cent in December 2018 and 5.54 per cent in November 2019.

The inflation in ‘pulses and products’ was recorded at 15.44 per cent, while in case of ‘meat and fish’ it was nearly 10 per cent.

Last month, onion prices — an important food in Indian households — soared tenfold, contributing to a surge in food inflation that has picked up steadily since March.

“The single biggest factor for this increase in the headline inflation is onions. While there is some sort of increase in other food prices as well, we don’t see that to be extremely alarming,” Aastha Gudwani, India economist at BofA Global Research told news agency Reuters.

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