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Economy

January Retail Inflation Hits Three-Month Low at 5.1% as Food Prices Rise Slowly: Govt Data

However, this time as well rural inflation remained higher than urban areas. In 2022-23, rural inflation was higher than urban inflation for the entire year.

New Delhi: Retail inflation in January fell to a three-month low of 5.1%, as prices of food items rose more slowly, as per data released by the National Statistical Office (NSO).

However, this time as well rural inflation remained higher than urban areas. In 2022-23, rural inflation was higher than urban inflation for the entire year.

According to moneycontrol, this trend of higher rural inflation has persisted for nearly two years.

Inflation rates in rural areas stood at 5.34%, down from 5.93% in the same month a year ago. In urban areas, it stood at 4.92%, down from 5.46% in the same month a year ago.

Food inflation accounts for nearly half of the overall consumer price basket. It rose 8.3% in January, compared with a 9.53% rise in December, Reuters reported. It was 6% in the year-ago period.
Prices of cereals rose 7.83% year-on-year in January compared to 9.93% in the previous month. Vegetable prices rose 27.03% compared to 27.64% in December, Reuters reported citing the data.

The decline in retail inflation follows a four-month high in December when it rose to 5.7%, led by higher food prices that rose 9.5% nationally. The prices of food also breached the 10% mark for urban consumers, hitting 10.42%, in the same month.

According to the Indian Express, January marked the 52nd month of retail inflation staying above the 4% in the 4+/- 2 per cent band of medium-term inflation target set by the Reserve Bank of India (RBI).

Core inflation in the non-food and non-fuel segment fell to a 50-month low of 3.6% in January, said the newspaper.

However, higher food inflation is a cause of concern as it has the potential of impacting the core inflation.

“This (core inflation) is a 50-month low and suggests that RBI’s monetary policy perhaps is working by compressing the demand. But the headline is still higher than the targeted 4% due to higher food inflation and continues to be a worry area for RBI because it has the potential of impacting the core inflation via wage-price spiral,” a note by India Ratings’ principal economist Sunil Kumar Sinha and senior analyst Paras Jasrai said, according to the Indian Express.

Urban food inflation moderated to 9.02% in January from 10.42% in December. Rural areas registered 7.91% food inflation in January as against 8.49% in the previous month, the newspaper reported.