December retail inflation inches up for 5th month to 5.61%

New Delhi: Rising for the fifth straight month, retail inflation or CPI quickened to 5.61 percent in December, mainly on costlier vegetables and cereals, limiting the headroom for the Reserve Bank to lower rate next month.

Food inflation too rose to 6.40 percent during the month, government data released on Tuesday showed.

Retail inflation measured by the consumer price index (CPI) was at 5.41 percent in November 2015 and 4.28 percent in December 2014.

Retail prices of cereals and products moved up by 2.12 percent in December, from 1.7 percent in November.

The growth in prices in meat and fish stood out at 6.57 percent as against 5.34 percent in November while that of eggs was at 0.97 percent, from 0.5 percent in the previous month.

The prices of protein-rich items such as meat, fish and eggs generally go up during the winter as demand spikes.

However, seasonal fruits turned cheaper in December, with inflation print at 0.64 percent although vegetables prices grew 4.63 percent.

Pulses continue to pose a big challenge for policymakers as the rate of price growth stood at 45.92 percent, only marginally down from 46.08 percent in November.

Retail inflation in the oil and fats category moved up to 7.06 percent while that of fuel and light, it was 5.45 percent.

"We are not surprised as this is a very sticky consumer inflation, but is well within the RBI target of 6 percent.

Once the base effect comes into play, I see a downward trend in CPI and a very strong case for interest rates coming down," Yes Bank CEO and MD Rana Kapoor told reporters here.

The Reserve Bank keeps track of retail inflation to decide on its bi-monthly monetary policy. The next meet is due on February 2.

The apex bank has been targeting 6 percent inflation target by January 2016.