November inflation eases to 7.24%

However, food inflation rose to 8.5% from 6.62% in the previous month

Inflation declined to 7.24% in November from 9.46% in the same month a year ago although prices of food items like potato, wheat, cereals, rice, pulses, edible oil and sugar went up during the period.

Inflation, as measured by the Wholesale Price Index (WPI), stood at 7.45% in the previous month.

Food inflation, as a category, rose to 8.5% during the month, from 8.32% a  year ago. Food articles have 14.3% share in the WPI basket.

Vegetables prices declined by 1.19% in November this year as compared to surge of 10.68% in same month a year ago.

Potato and onion prices, however, shot up by 72.20% and 17% respectively year on year in November this year as compared to a decline of 9.31% and 35.15% in the same period last year.

Wheat turned expensive by 23.19% in November from a decline of 4.86% in the same month a year ago. Cereals became dearer by 15.85% from a rise of 2.15% in the same month last year.

Pulses and eggs, meat and fish became costlier by 19.10% and 14.19% in November. These food items also saw a surge in prices by 14.96% and 11.40% in November last year.     

For the fuel and power category, inflation moderated to 10.02% during the month from 15.48% in November 2011. However, diesel inflation increased by 14.60% last month.

In the manufactured items category, prices of cotton textiles, man-made textile, iron and steel paper and paper products, rubber and plastic products rose relatively at a lower pace compared to the same month of the previous year.

The rate of price rise in the manufactured products was 5.41% in November, as against 8.17% in the corresponding month of last year.

Inflation for September was revised upwards to 8.07% from 7.81% as per provisional estimates.

Meanwhile, retail inflation in November moved up to 9.90%, mainly on account of higher of sugar, vegetables, edible oil and clothing.

The retail inflation stood at 9.75% in October.

Due to persistent high level of inflation, the Reserve Bank last month in its half-yearly monetary policy review kept the benchmark interest unchanged.

But it slashed the cash reserve ratio (CRR) -- the portion of deposits banks have to park with RBI -- by 0.25% so as to infuse additional liquidity of Rs 17,500 crore into the financial system. The CRR currently stands at 4.25%.

The central bank kept the repo rate, at which it lends to the banks, unchanged at 8%.

The reverse repo rate, at which RBI absorbs excess liquidity through borrowings from banks, is at 7%.

RBI Deputy Governor K C Chakrabarty yesterday said there is a possibility of cutting the repo rate only when inflation comes down.

However, he expected inflation to come down in about 2-3 months.