This is the second straight month that retail inflation has decreased. It has dropped to its lowest level in four months. This has raised expectations that the RBI may soon offer interest rate reductions as a gift. The rate of vegetable inflation in December 2024 has somewhat decreased.
For the second straight month, inflation has been alleviated for the general public. Due to the decline in food prices, retail inflation in December was 5.22 percent. Retail inflation hasn’t been this low in four months. The rate of vegetable inflation in December 2024 has somewhat decreased. In November, the retail inflation rate was 5.48 percent.
Will interest rates be lowered by the RBI?
The path for lowering policy interest rates may also be cleared if the trend of falling retail inflation persists in January. Since February 2023, the RBI has not altered the repo rate. Shaktikanta Das, the governor of the RBI at the time, had stated repeatedly that the central bank’s primary goal is to lower inflation. The goal set by the central bank is to reduce retail inflation to 4%.
However, the RBI may now think about lowering interest rates under the direction of Sanjay Malhotra, the recently appointed governor. The ongoing inflation is the cause of this. Additionally, lowering interest rates will contribute to accelerating the economy’s slowdown. The necessity of lowering interest rates has been stated by a number of Union ministers, including Finance Minister Nirmala Sitharaman. The RBI MPC’s next meeting is scheduled for February 2025.
In December 2024, what becomes less expensive?
Compared to December 2023, the retail price of vegetables rose by 26.56% in December. In this, potatoes, peas, and cabbage were the main ingredients. In comparison to December 2023, the price of potatoes rose by 68.23%, peas by 89.12%, cauliflower by 39.42%, and garlic by 58.18%.
Concurrently, the cost of cumin, ginger, and dry chilies decreased by 40%, 22%, and 10%, respectively. In addition to veggies, edible oil, fruits, and vegetables all saw price increases in December of last year. Compared to December 2023, edible oil and fruits grew by 14.60 and 8.49 percent, respectively.
The state with the highest inflation is Chhattisgarh-Bihar.
The retail inflation rate in each of the nation’s states varies significantly. As a result, the Finance Ministry is working to keep the inflation rate in each state close to the same. According to the present trend, backward states have greater rates of inflation. In contrast, developed states have relatively lower inflation rates.
The national retail inflation rate in December was 5.22 percent, according to inflation figures. However, Telangana’s retail inflation rate was 3.14 percent, Gujarat’s was 4.93 percent, and Delhi’s was just 2.51 percent. At the same time, less developed states have retail inflation rates that are significantly greater than the national average. In December, the retail inflation rate was 6.96 percent in Orissa, 7.63 percent in Chhattisgarh, and 7.36 percent in Bihar.
Why has Delhi’s inflation rate decreased?
According to experts, Delhi has the lowest rate of inflation since it serves as a hub for trade and the delivery of food products throughout North India. Produce is transported from Delhi to other regions of the nation after farmers from all the neighboring states first bring it to Delhi. Delhi has lower prices as a result. Second, Delhi offers lower prices for gasoline, diesel, CNG, and other fuels. This helps Delhi’s inflation data as well.
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