Owing to rising food prices, India's December retail inflation surges to 7.35%

India's retail inflation rose to 7.35 per cent in December the highest in more than five years, triggering further growth concerns in the country amid a slowing economy.

The pick-up in inflation rate was mainly driven by rising food prices.

On February 1, Finance Minister Nirmala Sitharaman will present the annual budget for this year. According to a report, it budget is widely expected to increase spending on infrastructure and cut taxes.

The Reserve Bank of India (RBI) will hold its next policy review from February 4 to 6.

Annual retail inflation in December remained above the RBI's medium-target of 4% for the third straight month, and also above the 5.54% posted in November and higher than the 6.20% forecast in a Reuters poll of economists.

Retail inflation had touched 7.39% in July 2014, according to Refinitiv data.

Retail food prices, which make up nearly half of India's inflation basket, increased 14.12% in December from a year earlier, against 10.01% in November. Some vegetable prices, including prices of onions that are a staple in Indian cooking, have increased more than four-fold since June.

The RBI cut its policy repo rate by 135 basis points last year before holding in December while warning against rising inflationary pressures.

Meanwhile, the government and central government have downwardly revised growth forecasts to an 11-year low of 5% for the current fiscal year ending in March.

(With inputs from Reuters)