Annual urban headline inflation decreased to 24.1% in December 2024, down from 25.5% in November 2024, marking the lowest rate in two years. This decline is primarily driven by a reduction in food inflation, which steadily decreased over the course of 2024. In December, lower prices for fresh vegetables offset the increase in non-food inflation, contributing to the overall decrease.
Annual core inflation remained largely unchanged at 23.2% in December 2024, slightly down from 23.7% in November 2024. Monthly core inflation was 0.9% in December 2024, compared to 1.3% in December 2023 and 0.4% in November 2024. This mild increase reflects a rise in retail and services inflation, including spending on restaurants, cafes, and rents.
Monthly urban headline inflation recorded 0.2% in December 2024, compared to 1.4% in December 2023 and 0.5% in November 2024. The slowdown is attributed to a stronger-than-usual decline in fresh vegetable prices, which offset the increase in non-food inflation driven by internet and mobile services, pharmaceuticals, and other non-food goods.
Annual rural headline inflation slowed to 22.8% in December 2024, down from 24.4% in November 2024. Similarly, annual nationwide headline inflation decreased to 23.4% in December 2024, down from 25.0% in November 2024.
Breakdown of Price Changes
In December 2024, prices of fresh fruits increased by 7.1%, while prices for fresh vegetables dropped by 16.3%, a stronger-than-usual seasonal decline. Together, these changes contributed -0.61% to the monthly headline inflation.
Prices of poultry and eggs fell by 0.1% and 3.4%, respectively, contributing -0.07% to monthly headline inflation. Dairy product prices rose by 0.6%, contributing 0.03%, while oils and fats increased by 0.8%, adding 0.02% to inflation.
Core food items, including red meat, market sugar, pulses, confectionery, and market tea, collectively contributed 0.03% to monthly headline inflation.
Services and Retail Price Changes
Services prices increased by 1.5%, contributing 0.42% to monthly headline inflation. This rise was primarily driven by price hikes in mobile phones, internet services, restaurant and cafe expenditures, as well as higher rents.
Retail prices rose by 1.7%, contributing 0.23% to monthly headline inflation, with increases in clothing, footwear, vehicle purchases, personal care products, and household cleaning items.
Prices of regulated items, such as pharmaceuticals and public transportation, increased by 0.8%, contributing 0.16% to monthly headline inflation.
Core Inflation Developments
Monthly core inflation was influenced by changes in core CPI components. Core food items contributed 0.02% to monthly core inflation, while retail items and services contributed 0.32% and 0.58%, respectively.
