India’s Retail Inflation Registers An Increase of 5% In December, 2014

After recording a low inflation rate of 4.4% in November, India’s retail inflation registered a rise of 5% in December owing to increasing food prices. This also hints at a possibility of an early interest rate cut by the Reserve Bank of India (RBI).

Earlier, a survey of 25 analysts conducted by Reuters showed that retail inflation would accelerate to 5.4% in December.

"With markets pushing for the central bank to lower rates, the release (of CPI) is likely to temper expectations of an imminent start in the rate cutting cycle as fading base effects lift inflation," Radhika Rao, an economist at DBS, told Reuters.

Last month, wholesale price inflation (WPI) is expected to have picked up to 0.6%, which was flat in November. The WPI data is set come out on January 14.

By January 2016, the apex bank of India has targeted 6% inflation. The RBI also indicated that if the target is met it would try to target a 4% goal. (Image: indiatimes.com)