The retail inflation seems to show no sign of decline. For December, there has been a considerable rise in the retail inflation to 5.21 per cent as compared to 4.88 per cent recorded in November. The recent rise in the retail inflation may put pressure on the Reserve Bank of India (RBI), which is supposed to keep it at 4 per cent with a margin of around 2 per cent. It is important for it to keep retail inflation under control. The recent numbers may put pressure on it to keep the repo rate unchanged.
The reason behind the high retail inflation is rise in prices of food items, egg, and vegetables. The retail inflation, based on Consumer Price Index (CPI), was 4.88 per cent in November. In December 2015, it was 3.41 per cent. 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. Inflation saw moderate rise in case of cereals and pulses.
The inflation, based on monthly WPI (Wholesale Price Index), rose to eight-month high of 3.93 per cent for November on the back of rise in food and fuel prices. WPI Inflation stood at 3.59 per cent during the previous month and 1.82 per cent during the corresponding month of the previous year. It rose to six-month high of 3.59 per cent in October as compared to 2.6 per cent for in September and 1.27 per cent during the corresponding month of the previous year.