In a boost to household budgets, India’s headline retail inflation dropped to 1.33 percent in December from 1.67 percent the previous month, official figures revealed. This reading, the lowest since July 2019 outside pandemic distortions, signals easing cost-of-living pressures.
The food and beverages basket, which constitutes nearly 46 percent of the CPI, contracted by 1.53 percent – extending a rare deflationary streak to seven months. Cereals dipped 2.01 percent, eggs-meat-fish-poultry eased 0.79 percent, and spices saw a 1.92 percent decline. Vegetables led the deflation with a staggering -16.85 percent drop.
Core inflation, excluding food and fuel, remained stable at around 3.4 percent, providing a balanced view of underlying trends. Rural areas experienced even softer inflation at 1.01 percent compared to 1.83 percent in urban centers.
Market reactions were muted, with bond yields dipping slightly as investors anticipate steady RBI policy. ‘Sustained food deflation reduces passthrough risks to headline numbers,’ said an economist from a Mumbai-based research firm.
As India eyes sustained sub-4 percent inflation targets, December’s data paints an optimistic picture. Government initiatives on supply chain efficiencies and farmer support have evidently paid off, setting a stable platform for festive and wedding season demands ahead.