Food prices in the country may witness an increase, as retail inflation rose to 5.32 per cent for the month of December as compared to 4.69 per cent in November. The rise in prices of essential commodities may also negate the Reserve Bank of India's intent of cutting key interest rates. RBI's Governor Raghuram Rajan has kept interest rates unchanged at 8 per cent over the past one year, ignoring suggestions from the Government and industry to ease monetary policy.
However, market analysts believe that the sharp fall in global crude oil prices following a marked decrease in the country's oil import bill, will allow the Central Bank to cut interest rates. "We expect the RBI to cut the repo rate by a total of 50 basis points after the Union Budget for 2015-16 is presented," said Aditi Nayar, an economist at ICRA, the Indian arm of rating agency Moody's.