Consumer Price Index: CPI inflation spikes to 6.52 % in January, after hitting 1-year low in December

India's headline retail inflation rate spiked to 6.52 per cent in January 2023, after witnessing a one-year low of 5.72 percent in December, data released on February 13 by the Ministry of Statistics and Programme Implementation showed.

The inflation rate has breached RBI's tolerance band of 2-6 per cent for the first time in three months. After being continuously high, beyond the tolerance level of 6 per cent from January’22 till October’22, the rate eased for the first time in November.  

As for the medium-term target of 4 percent, CPI inflation has now exceeded it for 40 months in a row. Inflation was expected to remain above the medium-term target of 4 per cent in the coming years, with an average of 5 per cent in the upcoming fiscal year starting April 1, a separate Reuters poll predicted, near the RBI's prediction of 5.30 per cent.

The Reserve Bank of India (RBI) on February 8 projected retail inflation to ease to 5.3 per cent in next fiscal on assumptions of lower imported inflation, even though core inflation remains sticky.

Month to month change (%) based on All India CPI and Consumer Food Price Index (CFPI) for the month of January 2023#KnowYourStats#DataForDevelopment#CPI#Retailinflation pic.twitter.com/s0RnLcAd8S

— Ministry of Statistics & Programme Implementation (@GoIStats) February 13, 2023

RBI Governor Shaktikanta Das while announcing the Monetary Policy Committee's decision, said that the inflation outlook for the current fiscal has improved from 6.8 per cent projected earlier, to 6.5 per cent. He said that the steeper-than-expected decline in vegetable prices and crude are at play.