India’s December retail inflation eases to 5.22%, food inflation at 8.39%

Retail inflation in India eased to a four-month low of 5.22% in December 2024 mainly due to easing of prices in the food basket, data released by the Ministry of Statistics & Programme Implementation showed on Monday (January 13).

According to the CNBC-TV18 Poll of economists, the January 2024 CPI was pegged at 5.3%. Inflation based on the Consumer Price Index (CPI) was at 5.48% in November 2024 and 5.69% in December 2024.

“The CPI (General) and food inflation in December 2024 are the lowest in the last four months,” the NSO said.

Also Read: Indian economy likely to be ‘a little weaker’ in 2025: IMF MD

Food inflation for December came in at 8.39%, marginally higher than the poll projection of 8.3% but down from 9.04% in November 2024. Rural inflation was recorded at 5.76%, a decline from 5.95% in the previous month, while urban inflation eased to 4.58% from 4.83%.

Among key categories, vegetable inflation dropped to 26.56% from 29.33%, pulses inflation moderated to 3.83% from 5.41%, and fuel and light inflation improved to -1.39% from -1.83%.

Housing inflation stood at 2.71%, slightly lower than November’s 2.87%, while clothing and footwear inflation remained stable at 2.74% compared to 2.75% in the previous month.

Also Read: India’s economy to grow at slowest pace in 4 years; manufacturing faces sharpest decline

Aditi Nayar, Chief Economist and Head – Research & Outreach at ICRA, said, “While the CPI inflation declined to 5.2% in December 2024 from 5.5% in November 2024, the pace of the correction was narrower than expected. In sequential terms, the dip was driven by food and beverages, even as the YoY inflation for fuel and light, and pan, tobacco and intoxicants recorded mild upticks.

The sharp sequential fall in vegetable prices in January 2025 is likely to augur well for the food and beverages inflation print for the month, which is expected to ease to a five-month low of ~6.0-6.5% in the month from 7.7% in December 2024. Consequently, ICRA estimates the headline CPI inflation to soften to 4.5-4.7% in January 2025 from 5.2% in December 2024.”

The Reserve Bank of India (RBI) has been tasked by the government to ensure retail inflation remains at 4% with a margin of 2% on either side. The CPI data is mainly factored in by the RBI while making its bi-monthly monetary policy.