Inflation is within our expected lines and within RBI's range, says Arun Jaitley

For the 14th month in a row, wholesale prices fell in December, but the rate of decline at 0.73% was the slowest in last one year as food prices shot up, indicating return of inflationary pressures ahead of RBI's monetary policy review.

The wholesale price index-based inflation, which has remained in the negative zone since November 2014, has inched up in the last four months. It was (-)1.99% in November. In December 2014, however, it was (-)0.50%.

"It (inflation) is within our expected lines and within RBI's range," Finance Minister Arun Jaitley said while speaking to reporters on the sidelines of a function here.

Food inflation shot up to 8.17% in December as against 5.20% in the previous month.

Inflation in pulses and onion was 55.64% and 25.98%, respectively. The rate of price rise in the case of vegetables was 20.56% in December and for fruits, it was 0.76%.

Industry body Ficci said continuation of the deflationary trend was an indication of weak demand in the economy. "We hope that the central bank will respond to the situation appropriately and take steps that would aid the process of industrial recovery."

The Reserve Bank may also face pressure to reduce the key lending rate further as industrial production contracted 3.2% in November, its sharpest decline in four years.

Besides IIP, the central bank also looks into retail inflation data while firming up its monetary policy stance.

Retail inflation has been rising for five straight months and came in at 5.61% in December. RBI's next bi-monthly policy review will be unveiled on February 2.