New Delhi: India’s wholesale price inflation accelerated to 3.39% in December as compared to 3.15% for the previous month.

Though food inflation contracted by 2.2% due to moderating vegetable prices, inflation for fuel items (0.7%) and manufactured goods (0.1%) picked up on the back of hardening prices of commodities. The industry department also revised upward the October wholesale price inflation number to 3.79% as compared to the provisional figure of 3.39% released earlier.

Data released by the statistics department on Friday showed retail inflation decelerated to a two-year low at 3.41% in December, against 3.63% the previous month, as vegetable prices continued to contract.

The Reserve Bank of India (RBI) is scheduled to hold the next meeting of the monetary policy committee on 8 February.

The central bank on 7 December kept its interest rates unchanged, holding that crude oil prices may firm up in the coming months and reverse the gains from softer vegetable prices. “Volatility in crude prices and the surge in financial market turbulence could put the inflation target for Q4 of 2016-17 at some risk," it said.

RBI is targeting to keep retail inflation under 5% in the fourth quarter and 4% within a band of 2% on either side in the medium term.

The central bank said while drop in vegetable prices might bring down overall retail inflation, downward inflexibility in inflation excluding food and fuel could set a resistance level for future downward movements in headline inflation.

Crude oil prices have remained volatile after touching an 18-month high of $56.44 per barrel last month as members of the Organization of the Petroleum Exporting Countries (Opec) and oil producers outside the group led by Russia agreed to reduce crude oil output by almost 2% of global oil supply.

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