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December Retail Inflation At 17-Month High Of 5.21%

12 January 2018

According to the data released by The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, retail inflation went up mostly due to hardening fuel and vegetable 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.

Analysts polled by Reuters had predicted December's retail inflation rate would climb to 5.10%, the highest since July 2016, from 4.88% in November.

But clothing prices fell for the fourth consecutive month, and airline fares fell 0.5% after a 2.4% drop in November.

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Retail food prices rose by 4.96% in December 2017 as compared to 4.35% in November. It raised rates three times a year ago.

However, economists believe the central bank may be forced to accelerate that pace if there are hints that inflation is beginning to rise more rapidly, given that unemployment continues to hover at 17-year lows. He said he expected the next rate hike to occur in March with a total of four hikes this year.

Petrol prices declined after a big jump in the previous month, outweighing the rise in winter fuel oil prices as a cold snap hit the Northeastern US, the report said.

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Factory output growth in October was at 2.2% while CPI was at 5.2 per cent from 4.88 per cent a month ago.

Shelter costs rose 0.4% in the month, while medical care increased 0.3% and food was up 0.2%.

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. Clothing costs are one key sector bucking the trend of higher prices.

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December Retail Inflation At 17-Month High Of 5.21%