Retail inflation rises for 5th month to 5.61% in December

QUICK PILL

• Pulses continue to pose a big challenge for policymakers as the rate of price growth stood at 45.92%, only marginally down from 46.08% in November.

• The Reserve Bank keeps track of retail inflation to decide on its bi-monthly monetary policy. The next meet is due on February 2.

Rising for the fifth straight month, retail inflation or CPI quickened to 5.61% in December, mainly on costlier vegetables and cereals, limiting the headroom for the Reserve Bank to lower rate next month. Food inflation too rose to 6.40% during the month, government data released on Tuesday showed.

Retail inflation measured by the consumer price index (CPI) was at 5.41% in November 2015 and 4.28% in December 2014. Retail prices of cereals and products moved up by 2.12% in December, from 1.7% in November.

The growth in prices in meat and fish stood out at 6.57% as against 5.34% in November while that of eggs was at 0.97%, from 0.5% in the previous month. The prices of protein-rich items such as meat, fish and eggs generally go up during the winter as demand spikes.

However, seasonal fruits turned cheaper in December, with inflation print at 0.64% although vegetables prices grew 4.63%. Pulses continue to pose a big challenge for policymakers as the rate of price growth stood at 45.92%, only marginally down from 46.08% in November.

Retail inflation in the oil and fats category moved up to 7.06% while that of fuel and light, it was 5.45%. "We are not surprised as this is a very sticky consumer inflation, but is well within the RBI target of 6%. Once the base effect comes into play, I see a downward trend in CPI and a very strong case for interest rates coming down," Yes Bank CEO and MD Rana Kapoor told reporters here.

The Reserve Bank keeps track of retail inflation to decide on its bi-monthly monetary policy. The next meet is due on February 2.

-PTI