High Retail Inflation Doesn't Warrant Higher Interest Rates | Mint Wide Angle

Retail inflation in December hit its highest since July 2014, but it was mostly driven by a 60% jump in vegetable prices and a 15% rise in the price of pulses. Excluding these two food groups, retail inflation was 3.8%, which is within the RBI's comfort zone. Since the demand for food doesn't get affected by interest rates, this rise in retail inflation does not warrant any hike in the RBI's signal rates.