India’s retail inflation climbed to a three-month high of 6.52% in January, partly fuelled by higher food prices, which account for nearly 40% of the consumer price index (CPI) basket. A year ago, inflation was at 6.01%.

CPI inflation remained above the Reserve Bank of India’s (RBI) upper tolerance limit of 6% since January 2022, barring the two months of November and December.

In December 2022, retail inflation stood at 5.72% while it was at 5.88% in November. 

While the prices of vegetable declined in January 2023, most of the other items, including 'fuel and light' became dearer.

The rate of price rise in the food basket was 5.94% in January, up from 4.19% a month ago and 5.43% in the year-ago month, as per data released by the National Statistical Office (NSO).

The inflation in rural areas was higher at 6.85%, compared to 6% in the urban centres. 

The RBI has projected the retail inflation at 6.5% in 2022-23, with January-December quarter at 5.7%.

Headline CPI inflation moderated by 105 basis points during November-December 2022 from its level of 6.77% in October 2022.

Last week, the RBI raised the key short-term rate (repo) by 25 basis points to 6.5% with an aim to check price rise.