In a report drafted by SBI's Economic Research Department, it was noted that the hike in inflation was primarily due to the base effect, as analysed by Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser of SBI and author of the report.
"In line with our expectations, CPI inflation in December 2017 has increased to a 17-month high of 5.21 percent, compared to 4.88 percent in November. However, there is nothing to worry about; this higher number is primarily due to the base effect. In fact, the monthly growth of overall CPI inflation was at -0.29 percent for December 2017, compared to 1.10 percent in November 2017," said Ghosh.
Ghosh, in the report, further claimed that inflation during the period from January to June 2018 is likely to be on the higher side, owing primarily to the base effect. Some inflation numbers in the first half of 2018 could print over 5.5 percent, which could be a source of negative surprise, he added.
As per the figures released by the Central Statistics Office (CSO) on Friday, retail inflation for the month of December 2017 stood at 5.21 percent, up from 4.88 percent in November, while the general index for the month of November 2017 stood at 125.6, which is 8.4 percent higher as compared to the level in the month of November 2016.
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