NEW DELHI :Retail inflation crossed the Reserve Bank of India’s comfort level and rose to 5.21 per cent in December on rise in the prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future.

The retail inflation, based on the Consumer Price Index (CPI), was 4.88 per cent in November. In December 2015, it was 3.41 per cent.Retail food prices rose by 4.96% in December 2017 as compared to 4.35% in November.

The figures for rural and urban areas in December were 5.08% and 4.71%.which measures the change in retail prices, had increased to a 15-month high of 4.88% in November 2017.

The Consumer Price Index inflation for rural areas was 5.27% in December 2017, while that for urban areas was 5.09% as compared to that in December 2016. Both these figures are higher than those in November.

Among the 12 sub-groups in the food and beverages category, 10 showed a rise in prices. Vegetable prices rose the most in December – by 29.13%. While cost of eggs surged 9.48%, prices of pulses declined by as much as 23.47%, and spices by 2.21%.
The Reserve Bank has been asked by the government to keep inflation at 4 per cent, plus or minus 2 per cent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate).

As per the data released by the Central Statistics Office (CSO), inflation for the food basket increased to 4.96 per cent in December from 4.42 per cent in the preceding month.

The data revealed that eggs, vegetables and fruits became costlier, while inflation moderated in the case of cereals and pulses.(The Hindu)