AMN / NEW DELHI
India’s retail inflation hit a fresh high, growing 5.2 percent in December, mainly due to hardening housing, fuel and food prices, while inching towards RBI’s upper tolerance level of inflation at 6 percent.
Retail inflation, measured by Consumer Price Index (CPI) hit a 15-month high at 4.88 percent in November. CPI is the main price gauge that the Reserve Bank of India (RBI) tracks.
Data released by the central statistics office today showed that inflation for the month of December has already exceeded the Reserve Bank of India’s (RBI) medium term target. Last month, RBI’s Monetary Policy Committee (MPC) had forecasted that retail inflation will hover around the range 4.3 to 4.7 per cent in quarter ended December and March, higher than the previous projection of 4.2-4.6 percent.Retail inflation crossed the RBI’s comfort level and rose to 5 point 21 percent in December on rise in prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future.
The Reserve Bank has been asked by the government to keep inflation at 4 percent, plus or minus 2 percent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate).