Food inflation, which has been in negative territory for months, declined2.71 per cent year-on-year in December, compared with a steeper3.91 per cent fall in November.
Vegetable prices were still much lower than last year, falling18.47 per cent, but the pace of decline slowed from22.20 per centin November. This moderation in food price deflation pushed overall inflation higher.
With inflation staying well below the Reserve Bank of India’s comfort zone, the central bank cut interest rates by25 basis pointslast month to support economic growth. Economists now expect further rate cuts in coming months if inflation remains subdued.
India’s economy is projected to grow7.4 per centin the current financial year, giving policymakers space to keep borrowing costs low even as global trade tensions persist.
For consumers, the rise in inflation does not mean higher prices at the grocery store just yet. Food items, especially vegetables, remain far cheaper than a year ago, keeping pressure on household budgets low.
However, lower inflation also meanslower deposit returns, while borrowers benefit fromcheaper home and personal loansas interest rates decline.
Economists say inflation is likely to remain under control in the near term, but any rise in food or fuel prices could change the trend. For now, India continues to enjoy one of the lowest inflation rates among major economies.
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