The retail inflation is expected to surge further in December owing to the higher vegetable prices after it breached the RBI’s medium-term target of 4 per cent for the third straight month in November. The CPI inflation numbers will be released by the government Monday evening. The inflation is expected to rise by 6.2 per cent in December, according to a Reuters poll of economists. In November, the retail inflation was recorded at 5.54 per cent, up from 4.62 per cent in October. The CSO data would be watched closely ahead of the upcoming budget and ongoing economic slowdown. The food inflation which is on the rise since March last year spiked further on account of the rising onion prices.
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The WPI-based inflation rose to 0.6 per cent in the month of November 2019. In the last two months, it stood at 0.2 per cent and 0.3 per cent, respectively. Since the start of the current financial year, wholesale inflation is on a downward trend. In a surprise move, the monetary policy committee (MPC) of the RBI stood pat on policy rates in its last outing, as it waited for the full pass-through of the past policy rate reduction.
Meanwhile, the economy is seeing a slowdown for the past few months on account of both global and domestic factors. The economy grew at a dismal 4.5 per cent in the second quarter of the ongoing fiscal, largely on account of weak consumption. In the first GDP advance estimates, the economy has been pegged to grow at 5 per cent, in line with the RBI estimates much below than 6.1 per cent expected earlier.