Retail inflation may force RBI to hold rates: Report

Mumbai: Retail inflation, which accelerated to 7.35 per cent in December and could breach 8 per cent in January, may force the Reserve Bank of India to hold rates in the monetary policy review next month, according to a report.

Consumer Price Index (CPI) in December rose to about five-and-half year high of 7.35 per cent from 5.54 per cent in November, mainly driven by high vegetable prices.

It breached the upper end of the RBI's comfort level of 4 per cent plus-minus two percentage points. "RBI did not cut the rate in December when October 2019 inflation rate was 4.62 per cent.

Now that CPI inflation has surged to 7.35 per cent in December and January inflation is also expected to remain above 8 per cent, the RBI is likely to hold rate in the next policy," an SBI research report- Ecowrap said.

The RBI, which mainly factors in the CPI based inflation, is scheduled to announce its next bi-monthly monetary policy on February 6.