Annual retail inflation for the month of December spiked to 17 months high of 5.21 per cent.
According to data released by Central Statistics Office (CSO), the inflation rate for the last month was mainly driven by steep hike in food and fuel prices.
In November, the wholesale retail inflation rose to 15 months high of 4.88 per cent as prices of food articles, led by vegetables, soared.
In December 2015, the retail inflation, based on Consumer Price Index (CPI), was 3.41 per cent.
The Reserve Bank has been asked by the government to keep inflation at 4 per cent, plus or minus 2 per cent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate).
As per the CSO data, inflation for the food basket increased to 4.96 per cent in December from 4.42 per cent in the preceding month. The data revealed that eggs, vegetables and fruits became costlier, while inflation moderated in case of cereals and pulses.