 "Retail inflation at 5.41% in November")
Consumer Price Index-based (CPI) inflation for the month of November rose to 5.41 per cent, the highest in at least a year, compared with five per cent in October and 3.27 per cent in November 2014, official data showed on Monday. The November figure is in fact the highest since the Central Statistics Office (CSO) started releasing data on the new base year from January 2015 on. The rise came on the back of increasing food prices, especially of pulses, up 46.1 per cent year-over-year for November.
The previous highest monthly retail inflation rise under the new series was 5.4 per cent in June.
Consumer food price inflation rose 6.07 per cent for November, compared with a 5.25 per cent rise in October and 1.13 per cent in November last year. Among the sub-groups, the prices of pulses, which have a weightage of almost three per cent in the CPI index, rose 38.47 per cent for rural areas and nearly 61 per cent for urban areas, year-over-year, in November. Vegetables, with a weightage of 7.5 per cent, rose four per cent. Cereals and products, with a weightage of 12.35 per cent, rose 1.7 per cent.
“Pulses inflation can pose a threat to the fight against inflation and were instrumental in pushing retail prices in November. While sufficient food stock will play its role in managing cereals' inflation, pulses inflation would continue to exert pressure on headline inflation,” said Devendra Pant, chief economist with India Ratings.
The combined group of food and beverages, 54 per cent of the total index, rose 6.08 per cent. Fuel and lighting, with a weightage of nearly eight per cent, showed an increase of 5.28 per cent. Miscellaneous items — household goods and services, health, transport and communication, among others, with weightage of 27.26 per cent, rose 3.78 per cent over a year.
Analysts polled by Reuters had predicted November retail inflation to be 5.4 per cent, year-on-year. Those polled by Bloomberg had forecast 5.3 per cent. “The advantage of a low base has diminished and inflation rates will continue to reign in this range with an upward bias, as rabi sowing is not satisfactory so far,” said Madan Sabnavis, chief economist with CARE Ratings.
Economists say further action on interest rates by the Reserve Bank of India is unlikely this financial year. “RBI will continue to be watchful and is unlikely to tinker with rates for some time, until a clear picture emerges on Fed (US Federal Reserve) action (tomorrow) and inflation trends,” said Sabnavis.
“While RBI is more likely to achieve its January 2016 inflation target, achieving its medium-term target of five per cent would remain challenging. Chances of any more monetary easing in this fiscal are almost zero,” Pant added.
The monetary policy framework agreement between the government and the RBI had targeted CPI inflation for January at below six per cent.
That was reduced to 5.8 per cent by Rajan in October.
