Mint Quick Edit | Inflation is down: Will interest rates follow?
Subscribe to enjoy similar stories. With inflation a bugbear for policymakers, it’ll be a relief that the year-end saw price pressures ease, even if only a bit. Government data released on Monday showed that India’s consumer price index rose 5.2% from a year earlier in December, slower than the 5.5% rise in November.
December’s print is the lowest in four months. Though it’s still above the 4% central target being pursued by the Reserve Bank of India (RBI), it raises hopes of a further cool-off that may make space to ease monetary policy. Food prices, which had spiked after uneven rainfall during last year’s monsoon season, are starting to cool as supplies gradually normalize; India’s rate of food inflation declined to 8.4% in December from 9% in November.
Also read: Mint Primer | All about the inflation spike: how, why & when This should help reduce overall price pressures, unless soft demand in the economy suddenly starts reversing. With private consumption and investment both unsatisfactory, RBI may find it increasingly difficult to focus exclusively on price stability. Yet, it’s fiscal efforts we should count on to promote growth.
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