Retail inflation in Dec at 5.21% breaches RBI's medium term target of 4%, dashes hopes of rate cut in February

New Delhi: Retail inflation crossed the RBI’s comfort level and rose to 5.21 percent in December on rise in prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future. The retail inflation, based on Consumer Price Index (CPI), was 4.88 percent in November. In December 2015, it was 3.41 percent. The Reserve Bank has been asked by the government to keep inflation at 4 percent, plus or minus 2 percent, and its rise beyond the comfort zone will put pressure on the central bank not to cut interest rate (repo rate). [caption id=“attachment_4300199” align=“alignleft” width=“380”] Reuters.[/caption] As per the data released by the Central Statistics Office (CSO), inflation for the food basket increased to 4.96 percent in December from 4.42 percent in the preceding month. The data revealed that eggs, vegetables and fruits became costlier, while inflation moderated in case of cereals and pulses.