The retail inflation in December jumped to 7.35% as against 5.54% in November, according to government data released on Monday (January 12).
It may be recalled that the Reserve Bank of India kept interest rates unchanged in December following five cuts totalling 135 basis points due to rising inflation. The central bank is set to announce its next interest rate decision on February 6 after the presentation of Union Budget by Finance Minister Nirmala Sitharaman.
The rise in oil prices plays an important role in the surge of inflation in India and oil briefly rose above $70 a barrel last week for the first time since September due to tension between US and Iran. Notably, India is the third-biggest oil importer in the world.
The data released by the government showed that food inflation in December 2019 was 14.12%, while the vegetable inflation surged to 60.5%. The core inflation was recorded at 3.7 per cent.
RBI Governor Shaktikanta Das had said last week that price stability is the primary objective of the central bank as rising inflation disproportionately affects the lives of poor.