Retail inflation rose to 6.01 per cent in January on an annual basis and breached the RBI’s upper tolerance level. The rise in inflation was mainly due to higher prices of certain food items, said the data released by National Statistical Office (NSO) on Monday. The Consumer Price Index (CPI)-based retail inflation was 5.66 per cent in December 2021 and 4.06 per cent in January 2021. 

According to the NSO’s data, inflation in the food basket was 5.43 per cent in January 2022 as against 4.05 per cent in the preceding month. The Reserve Bank of India (RBI), which mainly factors in the CPI-based inflation, has been tasked by the government to keep the inflation at 4 per cent, with margin of 2 per cent on either side.

The uptick in the food basket was due to a sharp rise in prices of oils and fats, which climbed by 18.70 per cent on the year in January. Apart from this, meat and fish prices saw a rise of 5.47 per cent, while that of vegetables gained 5.19 per cent and pulses and products rose by 3.02 per cent. 

“The print is high, but we did expect inflation to be at this level in January. Base effect is playing a part in the reading. The prints will start falling from February on the lines the RBI has also forecast,” said Saugata Bhattacharya, the chief economict of Axis Bank, Mumbai.