India's CPI Retail inflation to 4.59 Percent in December 2020

 India's CPI Retail inflation to 4.59 Percent in December 2020

The Retail inflation is also known as the Consumer Price Index, ended lower than the market expectation in December Last year 2020. It is noteworthy that the RBI has a short term target of 2 to 6 Percent on Retail Inflation.

The CPI Retail inflation has been out of control for the past several months, far beyond the Central bank's target. With Bank interest rates falling, the CPI inflation rate had caused some apprehension. But it ended unexpectedly in December 2020 at 4.59 Percent.

Earlier it was 6.93 Percent in the month of November 2020. The above December inflation is said to be the lowest rate seen in the last 15 months. This is due to the low prices on Food items. The Food inflation which was 9.50 Percent earlier is now 3.41 Percent in December.

Inflation in Pan, Tobacco and intoxicants were only slightly higher at 10.74 Percent. It was 3.21 Percent from 3.19 Percent for the Housing segment on Retail Inflation. Similarly Fuel and Light rose to 3 Percent from 1.90 Percent.

 The prices of Clothing and Footwear has also gone up slightly due to the demand seen during the Festival days. For the first time in the current financial year, the CPI Retail inflation has come within the Central bank's Short term target.


Also the said above retail inflation was lower than the Market expectation of 5.28 Percent for the month of December 2020. We can expect the changes on Interest rates as the consumer price index inflation falls in the upcoming periods. 

The Reserve bank of India were announcing the interest rates by every quarter in it's post Monetary policy committee(MPC). Generally when the inflation is low, then the bank interest rate comes lower. This could become a favorable position for the Bond(Debt Funds) and Equity Markets. 

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