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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

Economy

Economy

India’s retail inflation eases to 4-month low of 5.22% in December 2024

India’s retail inflation dropped to a 4-month low of **5.22% in December 2024**, easing pressures on household budgets and signaling economic stability. Key drivers include declining food and housing inflation, though urban-rural disparities persist. While optimistic, policymakers remain cautious about volatile food and fuel prices impacting the broader economic outlook.

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India’s retail inflation eased to 5.22% in December 2024, its lowest point in four months, signaling a potential return to economic stability. This is a notable drop from 5.48% in November and 6.21% in October when consumer concerns were at their peak. While still slightly above the central bank’s target range of 4% ±2%, the current trend has sparked optimism among policymakers, households, and businesses alike.

 

Inflation, as measured by the Consumer Price Index (CPI), tracks the change in prices of a basket of goods and services over time. The **Reserve Bank of India (RBI), charged with keeping inflation within the mandated target, plays a vital role in moderating fluctuations. RBI Governor Shaktikanta Das reassured the public, stating, “We are fully committed to price stability.” The continued decline, albeit gradual, reflects ongoing efforts to bring inflation back within the acceptable range.

 

Interestingly, December data revealed a distinct urban-rural gap. While inflation in urban areas stood at 4.58%, rural inflation was significantly higher at 5.76%. This divide sheds light on unique economic challenges: rural areas often face higher costs due to supply chain inefficiencies, while urban centers benefit from better logistics and infrastructure. For rural households, rising expenses can erode disposable income, creating economic pressures not always mirrored in urban settings.

 

Food inflation, one of the largest contributors to CPI, showed a promising decline. The Consumer Food Price Index (CFPI)** dropped to 8.39% in December, down from 9.04% in November. Staples such as cereals, pulses, and sugar saw price reductions, offering relief to household budgets strained for much of 2024. However, certain food items remained costly. Vegetables, especially peas (+89.12%), potatoes (+68.23%), and cauliflower (+39.42%), registered sharp year-on-year price hikes. In contrast, spices like ginger (-22.93%) and jeera (-34.69%) provided much-needed price relief.

 

Urban residents received another break with stable housing inflation, which eased to 2.71% in December from 2.87% in November. Since housing inflation is tracked only in urban areas, it reflects trends in rental and real estate markets. While it remains under control, this metric is key for evaluating affordability in cities where living costs are persistently high.

It’s important to put December’s easing into perspective. Just two months earlier, in October 2024, inflation soared to a 14-month high, creating challenges for businesses and consumers. The gradual moderation since then is a promising sign, but not without cautionary notes. The RBI recently revised its inflation projection for the 2024–2025 fiscal year from 4.5% to 4.8%, citing potential risks, especially volatile food and fuel prices.

 


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