Retail inflation slows to 18-month low of 2.19% in December

India's retail inflation drops to 2.19% in December WPI inflation at eight-month low

India's retail inflation drops to 2.19% in December WPI inflation at eight-month low

The Wholesale Price Index (WPI)-based inflation stood at 4.64 per cent in November 2018, and 3.58 per cent in December 2017.

As per minutes of the Monetary Policy Committee meeting held on December 5, former RBI Governor Urjit Patel said that broad-based weakening of food prices and the sharp decline in worldwide crude oil prices imparts a downward bias to the headline inflation trajectory going forward.

Consumer price inflation fell to its lowest in 18 months in December 2018 following a persistent decline in food prices and a drop in fuel costs. The outcome was lower than a provisional 4.64 percent rise in November and below a 4.42 percent increase forecast by economists in a Reuters poll. In its fifth monetary policy review for the fiscal, last month, the Reserve Bank kept interest rates unchanged but held out a promise to cut them if the upside risks to inflation do not materialise.

Vegetables, too, saw deflation at 17.55 per cent in December, compared to 26.98 per cent in the previous month.

The Reserve Bank of India (RBI) mainly takes into account retail inflation data while formulating monetary policy.

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Annual growth in India's industrial output in November slumped to 0.5 percent from an upwardly revised 8.4 percent in October, on a slowdown in auto and garment manufacturing.

Consumer food price index was (-) 2.51 percent in December from (-) 2.61 percent in November.

Wholesale inflation in food rose to 0.07 percent as against a -1.96 percent in November 2018.

"A deflationary trend in many food items for the last few months only shows that farmers' incomes are not rising", said Pant.

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