December CPI Inflation Eases Further Aided By Moderation In Food Prices: CareEdge

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CareEdge Report

In December, the CPI inflation moderated to 5.2% from 5.5% in November, primarily due to a slowdown in food inflation. The inflation rate for vegetables continued to ease, dropping to 26.6% in December from 29.4% in November.

The arrival of fresh harvests has led to a seasonal correction in food prices. Vegetable inflation has significantly contributed to overall CPI inflation in recent months, averaging ~ 36% since September.

Just by excluding vegetables, CPI inflation stood at 3.9%, below the RBI’s target of 4%. In addition to the decline in vegetable inflation, ongoing deflation in spices (-7.4% YoY) and a fall in inflation of pulses (3.8% YoY) and sugar (0.31% YoY) have further contributed to the overall decrease in food inflation.

However, the inflation for edible oils (14.6% YoY) has increased, remaining in double-digit territory for the past two months. Meanwhile, core inflation remains subdued, staying below the 4% mark over the past year. The fuel and light category continued to remain in deflation territory. However, within the miscellaneous category, inflation in personal care items remained high (9.7% YoY).

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