In its fifth bi-monthly monetary policy, the Reserve Bank of India (RBI) had indicated that moderation in inflation, excluding food and fuel, observed in the first quarter of this fiscal has reversed and there is a risk that this upward trajectory may continue in the near-term. The central bank, therefore, kept the rates unchanged. Any chances of such happening in future remain\u00a0unclear considering the sudden rise in retail inflation for the month of October and spike in crude prices. The retail inflation for November has surged to a 15-month high at 4.88 percent, breaching the 4 percent target set by the RBI, from 3.58 percent in the previous month, government data showed on Tuesday. Brent crude has consistently remained above the $60-mark since the end of October, with OPEC extending its production cuts till the end of next year. A rise in demand for oil, especially from China, is expected to keep prices firm, at least in the near term. Bond yields likely to climb A sudden rise in inflation and crude oil price should be a cause for concern as due to these two factors bond yields rise. The 10-year bond yield is the benchmark interest rate of the economy and it\u2019s up 3 basis points at 7.22 percent in morning trade after rising to as high as 7.25 percent, the highest since July 2016, as bond prices fell. The bond price falls followed data out late on Tuesday showing annual inflation accelerating to a 15-month high. "Bond yields normally move ahead of the data and as such have steadily moved up over the last few weeks. Crude prices directly have a low correlation to CPI in India. Moreover, real rates in India are still very high relative to the global scenario where they are negative in most major economies. Overall food prices should moderate going forward and reduce inflationary pressures going into the second half of 2018. Prediction of LaNina is also positive from Agri price outlook. As such yields are likely to be rangebound in the 7-7.4% range," says famous investment adviser Sandip Sabharwal. \u00a0The bond yields have risen from 6.4 percent level in August despite the central bank slashing its repo rate back then.\u00a0As the oil prices rise further, inflation will get under further pressure and this would widen the fiscal deficit forcing the government to borrow more from the market. Badrish Kulhalli, head, fixed income at HDFC Standard Life Insurance Company, indicated that concern over inflationary pressures is the deciding factor for yield movement under the present circumstances. \u201cA lack of clarity on the fiscal deficit front has also been a major cause of concern, even as the market is waiting for November GST collections for some sort of guidance,\u201d he said. The US Fed is also expected to hike its Fed funds rate later this week. Although this factor has not taken precedence over inflation and fiscal deficit, it might still have an impact on the yields in the short term.