India's clothing and footwear inflation stays modest at 3.61% in December

18 January 2024, Mumbai

India's clothing and footwear sector continued its subdued inflationary trend in December, clocking in at a Y-o-Y growth rate of 3.61 percent, according to provisional data released by the National Statistical Office (NSO). This marks a slight increase from the 3.55 percent seen in November 2023.

Data point

The consumer price index (CPI) for the sector stood at 189.6 in December 2023, compared to 183 in December 2022. Diving deeper, the clothing sub-sector saw a slightly higher inflation rate of 3.75 percent, while footwear inflation came in at 3.05 percent.

Analytics

As an analyst points out, the relatively stable prices in the clothing and footwear sector offer some relief against the backdrop of a higher overall inflation rate of 5.69 percent in December. This trend could be attributed to factors such as lower input costs for raw materials and a competitive retail landscape.

While the overall inflation rate remains above the Reserve Bank of India's (RBI) target range of 2-4 percent, the moderate increase in clothing and footwear prices suggests that inflationary pressures in this sector may be easing.

Elbowroom; This could potentially give the RBI more room to maneuver in terms of setting its monetary policy in the coming months.

Caution is the watchword

However, experts caution against complacency. Global factors such as rising crude oil prices and potential supply chain disruptions due to geopolitical tensions could still pose upside risks to inflation in the medium term.

The RBI will likely continue to monitor the situation closely and adjust its policies as needed.

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