Food inflation at 18.32% YoY on December 25

India's food price index rose 18.32% and the fuel price index climbed 11.63% in the year to December 25, government data on Thursday showed.

In the prior week, annual food and fuel inflation stood at 14.44% and 11.63% respectively.

The primary articles price index was up 20.20% in the latest week, compared with an annual rise of 17.24% a week earlier.

The wholesale price index, the most widely watched gauge of prices in India, rose 7.48% in November from a year earlier, compared with 8.58% in October.

Commentary:

Hitendra Dave, Head of Global markets, HSBC India, Mumbai:

"This number reinforces the base case scenario of a 50 basis point rate hike in January. One has to be prepared now for a much larger frontloaded rate hike series than what one was expecting say a month ago, and therefore the entire swap curve should shift upwards."

Market reaction:

- The yield on most-traded 8.08% 2022 rose 3 basis points to 8.15% after the data. It had closed at 8.12% on Wednesday.

- The one-year swap rate edged up 4 basis points to 7.06% while the five-year benchmark swap rate rose 5 basis points to 7.80%, dealers said.

- The partially convertible rupee was largely unaffected by the data and continued to trade marginally stronger at 45.28/29 per dollar, versus 45.33/34 at close on Wednesday.