Consumer inflation worsens to 5.69% in December vs 5.55% the previous month

Consumer inflation—or the rate of increase in the prices the consumer pays for a basket of goods and services—in the country stood at 5.69 per cent in December, according to official data released on Friday.

Consumer inflation (also known as retail inflation), determined by the Consumer Price Index (CPI), stood at 5.55 per cent in the previous month, and 5.72 per cent in December 2022, according to a statement by the Ministry of Statistics & Programme Implementation.

Food inflation came in at 9.53 per cent in December 2023, worse than 8.7 per cent in November 2023 as well as 4.19 per cent in December 2022. Inflation in vegetables was at 27.64 per cent last month as against 17.70 per cent in November. In pulses, inflation accelerated by 50 basis points (bps) sequentially to 20.73 per cent in December. 

"While the food inflation data on a sequential basis was underpinned by the seasonal contractionary behaviour seen in December... Nonetheless, food inflation has still ticked up on year-on-year basis. Mandi prices are showing correction in perishables to continue, while select protein goods would need a watch," said Madhavi Arora, lead economist at Emkay Global Financial Services. 

The domestic inflation reading comes a day after official data from the US showed consumer prices in the world's largest economy increased in the last month of 2023 as rents continued to rise, edging 0.3 per cent higher for the month and up an annual 3.4 per cent as against economists' forecast for a 0.2 per cent and 3.2 per cent rise, respectively, according to news agency Reuters.

Meanwhile, separate data showed the domestic factory output—gauged by the Index of Industrial Production (IIP)—grew 2.4 per cent in November, a sharp decline from 11.7 per cent in the previous month and 7.6 per cent in November 2022.