News:The retail inflation based on Consumer Price Index(CPI) has reached a five and a half year high of 7.35% in December 2019.
Reasons for rise in retail inflation:
- The rise in retail inflation is primarily due to increase in Consumer food price inflation to 14.12% in December 2019.This is the highest since 17.89% in November 2013.
- This rise in food inflation has been viewed as transitory driven largely by the damage to the kharif crop from prolonged unseasonal rains during September to early November,2019.
- However,the simultaneous hardening of international prices poses a challenge to the government and the Reserve Bank of India in containing domestic food inflation at a time when the economy is already going through a deep slowdown.
- Further,the latest overall retail inflation at 7.35% is also above the Reserve Bank of India’s upper band target of 6%.
About Consumer Price Index(CPI):
- Consumer price index(CPI) is a statistic used to measure the average price of a basket of commonly used goods and services in a period relative to some base period.
- It measures change in the price level of a market basket of consumer goods and services purchased by households.
- It is widely used by countries as a macroeconomic indicator of inflation and deflation and as a tool by governments and central banks for inflation targeting and for monitoring price stability.
- The CPI data is released monthly by the Central Statistics Office(CSO) which functions under the Ministry of Statistics and Programme Implementation.