New Delhi, Jan 13: India’s retail inflation rose to 5.69 per cent in December 2023 up from 5.55 per cent in November last tear with higher food prices stretching household budgets, according to official figures released on Friday.Food inflation, which accounts for close to half of the overall consumer price index (CPI), shot up by 9.05 per cent from 8.657 per cent in November 2023.
The prices of vegetables, pulses, spices and fruits rose sharply during the month. However, there was some consolation in cooking oil prices declining during the month.
According to the data, vegetables prices shot up by as much as 31.34 per cent durng the month while pulses turned costlier by 2.65 per cent and spices were dearer by 19.05 per cent.
The prices of cereals also shot up by 9.53 per cent.
The consumer price inflation is now above the 4 per cent midpoint of the RBI’s 2-6 per cent target range and will make it difficult for the RBI to cut interest rates to spur economic growth.
The central bank is keen to keep inflation under control to ensure stability.
Meanwhile, Inflows of US$ 10.1bn in December 2320 are the highest ever monthly inflows recorded in a single month, a research by Bank of Baroda said.
The report said that the FPI flows into India witnessed a turnaround in 2023, registering inflows of US$ 28.7bn compared with outflows of US$ 17.9bn in 2022.
“Inflows in 2023 were the highest since 2017, when FPIs poured in US$ 30.8bn in the domestic market. However, true to their nature, FPI flows exhibited a great deal of volatility throughout the year,” the report said.
The report said that after a dismal start, FPI flow into India picked up pace, cumulatively totaling US$ 28.7bn in 2023.
“While equity segment continued to outperform, encouraging trend was also visible in the debt segment, particularly in the last few months of the year,” the report said.
It said that the improved corporate profitability, stable domestic macros, range-bound inflation and a stable political environment favour India as a preferred investment destination.
The report said that the India’s inclusion in JP Morgan’s bond index in June 24 as well as hopes that India might subsequently be included in other bond indices has been a key driver of FPI inflows in the debt segment.
“The trend is likely to persist and gather more pace in the first 2-quarters of 2024,” the report said.
It said that this will be positive for INR, which is likely to trade with an appreciating bias in 2024.