Worrying News: Retail Inflation Jumps To 6.52% In January

Pic courtesy Mint

New Delhi: After two months, retail inflation in India jumped sharply in January.

Data released by National Statistical Office (NSO) on Monday showed consumer price-based inflation rose to 6.52% in January – beyond Reserve Bank of India’s tolerance level of 6%.

After being above 6% for the first 10 months of 2022, retail inflation had fallen for two consecutive months, thanks to a sharp decline in vegetable prices.

Experts had predicted retail inflation will rebound marginally in January, but it’s actually registered a sharper rise than expected. The spike in inflation was triggered by food items, with the rate shooting up to 5.94% from 4.19% in December.

A sharper rise in inflation could be a worrisome indicator for the Indian economy as it would not only hurt the vast middle class population, but also hinder demand growth. Moreover, it will also have a direct impact on key interest rates as the central bank will be forced to tighten monetary policy further in April.

The latest inflation figures could have an impact on key interest rates, prompting the Reserve Bank of India (RBI) to tighten monetary policy in April and rethink key interest rates.