India's retail inflation accelerated to a five-month high of 5.59% in December. The RBI is expected to hold on to key policy rates next month amid concerns the fast-spreading Omicron variant of COVID may impact economic activities.

Analysts fear that rising Omicron cases, the unwinding of easy liquidity, and the risk of higher global crude oil prices could rise domestic prices in the next few months before easing in the second half of the year.



India December retail inflation climbs to five-month high of 5.59%


India's retail inflation accelerated to a five-month high in December.


Consumer prices (INCPIY=ECI), buoyed by rising prices of food and manufactured items, rose 5.59% in December from a year earlier and compared with 4.91% in the previous month, Ministry of Statistics data showed on Wednesday.


Price rises in December moved closer to the upper limit of Reserve Bank of India`s (RBI) 2%-6% target, but remained lower than the consensus Reuters poll forecast of 5.80%.

Rising prices and job losses amid a fall in income levels during the pandemic have become a major issue for millions of Indians, ahead of elections in five major states next month.

Food prices, which contribute to nearly half of the consumer price index (CPI), rose 4.05% year-on-year in December, compared with 1.87% a month before. 

Annual core inflation, excluding volatile food and energy prices, was estimated at between 6% and 6.01% in December.