India’s consumer inflation hit a three-month high in January at 6.5%, reversing its downtrend because of higher food prices. The year-on-year increase in the consumer price index (CPI) breached the central bank’s upper tolerance limit of 6%, after keeping within targeted range in November and December, according to the Ministry of Statistics and Programme Implementation (MoSPI).
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Food inflation –which accounts for 40% of the CPI basket – rose to 5.94% year on year in January 2023 from 4.19% in the previous month, the data show. While the spike in retail inflation was mainly caused by a surge in food prices, non-food sector prices also remained high.
Core inflation, which excludes food and fuel prices, stood at 6.3% in January. In a bid to rein in inflation, the Reserve Bank of India (RBI) had raised its policy interest rates by a total of 250 basis points since May 2022. The next monetary policy meeting is scheduled on 3-6 April 2023.
On 8 February, the central hiked its policy interest rates by 25 basis points to 6.5% as it forecasts retail inflation for the January-March 2023 quarter to be around 5.7% and expects core inflation to remain high.
Meanwhile, India’s factory output in December 2022, as measured through the Index of Industrial Production (IIP), slipped to 4.3%, from 7.3% in November, MoSPI data showed. This was, however, significantly higher than the 1% growth recorded in the same period last year. For April-December 2022, the first nine months of India’s current fiscal year, India’s factory output grew by 5.4%, according to official data.
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