Retail inflation rose to 7.35% in December from 5.54% the month before, government data showed on Monday. The rate of inflation exceeded the tolerance band of the Reserve Bank of India’s Monetary Policy Committee, Bloomberg reported. At the current level, retail inflation is at its highest since July 2014.
Inflation was pushed up by a rise in food prices and telecom tariffs. The Consumer Food Price Inflation rose to 14.12% in December from 10.01% in November. Prices of vegetables shot up 60.5%, with a 53.37% increase in urban areas and 75% hike in rural areas. Prices of pulses and products rose 15.44%, in rural and urban areas. Overall, the inflation rate of the food and beverages category was 12.16%.
Not a single item showed decrease in prices in December. Prices of fuel and light increased the least, by just 0.7%. A poll of 37 economists had estimated consumer price inflation to be at 6.7% in December 2019, Bloomberg reported.
The RBI is responsible for framing India’s monetary policy, and sets interest rates to keep inflation in control while pushing for growth. A rate increase is typically expected to curb inflation when prices are on the rise. The central bank targets a consumer price index-based inflation of 4%, with a tolerance limit of 2% on either side.