India's retail inflation shrinks to 5.72 per cent for December 2022 as food prices dip

India's annual retail inflation eased to 5.72 per cent in December from 5.88 per cent in the previous month, government data showed on Thursday. The inflation contracted by 0.4 per cent during November-December 2022 period, compared to 0.11 per cent contraction in October-November 2022 period. 

The latest inflation figures come against the forecasts by global business trackers that had predicted India's annual inflation to be up to 5.90 per cent for December 2022. The figures come for the month in which India's central bank (on December 7), had raised interest rates by 35 basis points to 6.25 per cent to tame the inflation.

The government has mandated the RBI to sustain retail inflation at 4%  — with a margin of 2% on either side. The dip in vegetable prices helped keep food prices low that helped keep inflation in the desired range.

India's inflation rate within central bank's 'tolerance band'

The inflation number has stayed within Reserve Bank of India's "tolerance band" of 2 to 6 per cent. The inflation in December contracted by 0.4 per cent in November-December 2022 period, compared to 0.11 per cent contraction in October-November 2022 period. 

Reports attribute the declining inflation rate to the easing food prices. The food prices account for nearly 40 per cent of India’s CPI (Consumer Price Index). 

Food inflation for December eased to 4.19 per cent. In November, it was recorded to be 4.67 per cent.

In December’s Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) had retained its inflation forecast of 6.7 per cent for FY23.

"We are extremely watchful of evolving inflation dynamics and look at data almost on a daily basis and we will keep an Arjuna's eye on inflation and we will be ready to act," RBI Governor Shaktikanta Das had said.

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