MUMBAI, Jan 15 (Reuters) - Indian government bond yields are expected to dip marginally in early trade on Monday as core inflation likely eased in December, even as headline retail inflation rose.

The 10-year benchmark bond yield is expected to move in the 7.14%-7.19% range till the debt auction, following its previous close at 7.1791%, a trader with a primary dealership said.

"Though there is no major surprise in the headline inflation numbers, constant easing in core inflation figures would be taken as a positive development by the market, and we could see some activity from bulls today," the trader said.

India's annual retail inflation rose at the fastest pace in four months in December, driven by a rise in prices of some food items, as the reading stood at 5.69% from 5.55% the previous month, while a Reuters poll had forecast a rate of 5.87%.

Core inflation, which strips out volatile food and energy prices, was estimated to be 3.8%-3.89% in December, compared with 4.05%-4.2% in November, according to two economists.

The January retail inflation estimate is tracking at sub 5%, as the impact of adverse base wanes and food inflation moderates, IDFC First Bank said.

"Core inflation is expected to continue to soften to 3.6% in January versus 3.9% in December, with input cost pressures remaining moderate. For the full year FY24, we maintain CPI inflation estimate at 5.4% and FY25 at 4.5%," the private bank added.

The Reserve Bank of India's (RBI) monetary policy committee left the benchmark repo rate unchanged at 6.50% for five consecutive meetings and with inflation remaining above the central bank's target, monetary policy could remain in "restrictive territory", the RBI said in a report last month.

Meanwhile, U.S. yields eased last week, after December producer prices data fell unexpectedly, raising bets of an early interest rate cut by the Federal Reserve. The 10-year yield eased to 3.95% on Friday, down 9 bps last week, after rising 18 bps in the first week. KEY INDICATORS: ** Brent crude futures 0.1% higher at $78.40 per barrel, after rising 1.1% in previous session ** 10-year U.S. Treasury yield at 3.9809%, two-year yield at 4.2681% ** India to switch bonds worth 180 billion rupees ($2.17 billion) ($1 = 82.8350 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)