India’s retail inflation eased to a one-year low of 5.72 % and stayed below the RBI’s upper tolerance limit for the second consecutive month amid cooling food prices. 

What’s more, industrial output rose at the fastest pace since June. Aided by a healthy growth in manufacturing, it rose sharply to 7.1%. 

The retail inflation numbers may prompt the Reserve Bank of India (RBI) to moderate the rate hike in its next monetary policy or even tempt it to press the pause button.

The last rate hike was 35 basis points compared to three-back-to-back increases of 50 basis points. The central bank has increased the repo rate by a cumulative 225 basis points since May 2022.

As per the data released by the National Statistical Office (NSO), the retail inflation based on Consumer Price Index (CPI) stood at 5.72% in December 2022 compared to 5.88% in the preceding month and 5.66% a year ago.

Food price inflation, which accounts for nearly 40% of the CPI basket, eased to 4.19% in December from 4.67% in November, aided by lower vegetable prices. However, prices of cereals and milk continued to rise.

India's industrial production growth, measured on the Index of Industrial Production (IIP), rose to a five-month high of 7.1% in November compared to a contraction of 4% in the previous month.

The previous high was recorded in June 2022 at 12.6%.

As per the IIP data released by the NSO, the manufacturing sector's output grew by 6.1% in November 2022.