December consumer price inflation hits a 5-year high of 7.35%

Consumer price inflation in the country climbed further to 7.35 per cent in December 2019 from 5.54 per cent in November, far exceeding the upper limit of Reserve Bank of India’s tolerance band, provisional figures released by the Central Statistics Office (CSO) showed.

At 7.35 per cent, consumer price inflation is the highest in the country in more than five years. At this rate the Reserve bank of India (RBI) my think of reversing its lose money policy and may hike policy rates.
India’s consumer price inflation has been steadily rising after hitting 3.15 per cent in July as food prices continued to rise steadily for the past few months, as opposed to the wholesale price inflation that has steadily declined till September.
The inflation rate based on the consumer price index (CPI) was 2.11 per cent in December 2018.
Data released by the CSO showed that inflation rate for the food basket rose further to 14.12 per cent in December 2019 from 10.01 per cent in November. Food price inflation was at (-) 2.65 per cent in December 2018.
Consumer price inflation for the rural areas shot up further to 7.26 per cent in December 2019 from 5.27 per cent in November 2019. It was 1.50 per cent in December 2018.
Consumer price inflation for the urban areas shot up further to 7.46 in December 2019 from 5.76 in November. It was 2.91per cent in December 2018.
Food price inflation for rural areas zoomed to 12.97 per cent in December 2019 from 8.83 in November. It was (-) 2.99 per cent in December 2018.
Food price inflation for urban areas climbed further to 16.12 per cent in December 2019 rising from 12.26 per cent in November. It was (-) 1.89  per cent in December 2018.
It now seems that the Reserve Bank of India, which has struck a note of caution during its policy announcement in December, after steadily reducing its policy interest rates for five consecutive occasions, may reverse the course and increase rates instead.