December brought good tidings for agricultural and rural workers as their CPI numbers reflected minimal inflation and outright food price deflation. The Ministry of Labour and Employment reported CPI-AL at 0.04 percent year-on-year and CPI-RL at 0.11 percent.
Delving deeper, food inflation plummeted to -1.8 percent for agri laborers and -1.73 percent for rural counterparts. Surging production has flooded markets with affordable essentials, countering previous inflationary pressures from supply disruptions.
This relief is profound for bottom-of-the-pyramid families, where food dominates spending. Enhanced affordability could spur consumption, supporting local economies and reducing poverty traps in agrarian regions.
A key backdrop is the overhaul of CPI series. Since June, with 2019=100 as base, data from 787 villages in 34 states/UTs informs these indices. Ditching the 1986-87=100 era, the new framework boasts wider coverage, modern methodologies, and improved accuracy to mirror current realities.
In the wider economy, retail inflation ticked up to 1.33 percent from 0.71 percent last month. Wholesale inflation rebounded to 0.83 percent from negative terrain, propelled by industrial and mining sectors.
RBI’s outlook remains optimistic: FY26 retail inflation near 2 percent, aided by GST relief and softening food costs. This environment encourages fiscal measures to amplify rural welfare schemes, ensuring equitable growth.
Stakeholders now focus on sustaining output gains through better irrigation, seeds, and market linkages to perpetuate this deflationary benevolence.