India Inflation Rate Accelerates to 17-Month High of 5.21%

Consumer prices in India increased 5.21 percent year-on-year in December of 2017, above 4.88 percent in November and market expectations of 5.1 percent. It is the highest inflation rate since July of 2016 amid faster rises in cost of food and housing.

Prices went up faster for food and beverages (4.85 percent from 4.41 percent in November). The food index alone rose 4.96 percent, above 4.42 percent in the previous month. Inflation accelerated for vegetables (29.13 percent from 22.48 percent) and fruits (6.63 percent from 6.19 percent) and prices of pulses fell slightly less (-23.47 percent from -23.53 percent). 

Also, prices went up faster for housing (8.25 percent from 7.36 percent). In contrast, the inflation slowed slightly for clothing and footwear (4.8 percent from 4.96 percent) and was nearly flat for fuel and light (7.9 percent from 7.92 percent).

The corresponding provisional inflation rates for rural and urban areas are 5.27 percent and 5.09 percent (4.79 percent and 4.9 percent respectively in November).

The central bank targets inflation at 4 percent with a tolerance band of ± 2 percent. It expects inflation to be between 4.3 percent-4.7 percent during the second half of the current fiscal year that ends in March.

India Inflation Rate Accelerates to 17-Month High of 5.21%

Joana Taborda |
1/12/2018 12:40:55 PM