For the first time since the advent of Inflation targeting era (2015), Inflation rate in India breached the permissible limit (+/- 4%) set by Monetary Policy Committee.
The Ministry of Statistics released the figures for December, 2019 which shows Retail Inflation to be around 7.35%.
This was mainly driven by high food Inflation, which stood at 14.12% from 10% in November, 2019. The vegetable Inflation (60.5%), which is mostly seasonal, is behind the spike in food Inflation.
The core Inflation remained steady at 2.6% citing the subdued domestic demand.
Reasons for high food Inflation
Onion prices saw 400% spike, followed by rise in prices of pulses (15%), meat and fish (9.6%) etc.
For onion, the rise is mainly due to untimely rains, drought in some regions and crop losses due to local factors resulting into supply shocks.
For Pulses, the skewed government policy which resulted into untimely import last year leading to rise in price this year. Plus, the inefficient distribution of wheat from FCI warehouses has led to rise in wheat prices.
