Market pundits surprised over sharp rise in inflation
The latest inflation figures have come as a surprise for most money managers, brokers and investors for whom macro-data outcomes are mostly about getting their forecasts right.
Official data on Monday showed that the consumer price index (CPI), or retail inflation, in December at 7.35 per cent rose to its highest in over 5 years. It was at 5.54 per cent in November 2019.
“Retail inflation rose to an over five-year high of 7.4 per cent in December 2019, significantly higher than CARE Ratings’ estimate of 5.8 per cent,” the rating agency said in a note.
Sharp rise in food prices was the chief cause of the hardening retail inflation.
In setting its monetary policy rates, the Reserve Bank of India has the declared median target of containing consumer inflation at 4 per cent with an outer limit of 6 per cent.
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