Retail Inflation Rises to 6.07% in February; Highest in 6 Months

The retail inflation rate of India, which is measured by the Consumer Price Index (CPI), jumped to a multi-month high of 6.07 per cent in February, data released by the National Statistical Organisation said on Monday.

The latest inflation rise is the highest in six months. The reading of the CPI-based retail inflation had for the first time since June 2021 breached the Reserve Bank’s Monetary Policy Committee upper limit in January this year.

The rise in the CPI-based retail inflation was backed by the rise in the prices of food products including cereals, eggs, meat, milk products and vegetables. The prices of paan, tobacco, clothes and other essential items have also increased. The retail inflation is also on the rise due to rise in fuel prices, the NSO said.

“The Price data are collected from selected 1,114 urban Markets and 1,181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During the month of February 2022, NSO collected prices from 99.6 per cent villages and 98.2 per cent urban Markets while the Market-wise prices reported therein were 89.6 per cent for rural and 92.9 per cent for urban,” the government said in a press release.

“The retail inflation hit up to 6.07 per cent in February. Meanwhile the food inflation too has surged to 5.85 per cent in February as compared to 5.43 per cent in January. This is the 5th month in a row that the CPI is observed to have risen, based on several factors like prices of cereals, eggs, and milk products rose since the beginning of the 1st quarter of 2022,” said DRE Reddy, CEO and managing partner at CRCL LLP.

“Since the conflict between Russia and Ukraine escalated last month prices continue to vary; crude oil products have a significant weightage in India’s inflation which led to a spike. This will mainly be cushioned by fresh crop arrivals, supply interventions with the hope of a good monsoon,” Reddy added.

The wholesale price-based inflation in February also rose to 13.11 per cent on hardening of prices of crude oil and non-food items, even though food articles softened. WPI inflation has remained in double digits for the 11th consecutive month beginning April 2021. Inflation last month was 12.96 per cent, while in February last year, it was 4.83 per cent.

Inflation in crude petroleum spiked to 55.17 per cent during February, against 39.41 per cent in the previous month, on rising prices of crude oil globally. The Reserve Bank last month kept its key repo rate — at which it lends short-term money to banks — unchanged for the 10th time in a row at 4 per cent, to support growth as well as manage inflationary pressures.

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