NEW DELHI : India’s retail inflation slowed to a three-month low of 6.93% in November as vegetable prices declined significantly, data released by the statistics department showed. However, the central bank is unlikely to reduce its policy rate any time soon, as inflation will still remain well above the upper limit of its 6% tolerance level.
In November, food inflation declined to 9.43% from 11% a month ago, with vegetable price inflation softening to 15.6% from 22.5% in October. However inflation for protein-based commodities such as meat and fish (16.7%), egg (20.3%) and pulses (17.9%) remains high.
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In particular, data released by the industry section on Monday showed that wholesale price inflation rose to a nine-month high of 1.55% in November, as inflation for manufactured goods accelerated even as vegetable prices declined.
“The main retail inflation for November printed much less than our expectations, benefiting from stable vegetable prices at the retail level. While this welcomes help, it is unlikely to prove appropriate for any near-term acceleration, ”said Aditi Nayar, chief economist at ICRA Ltd.
RBI in its latest monetary policy review earlier this month kept its policy rate unchanged at 4% but signaled to keep its policy accommodative to sustain growth. However, it raised its inflation forecast to 6.8% in the third quarter, 5.8% in the fourth and 4.6-5.2% in the first half of the following financial year. The central bank’s earlier inflation rate stood at 5.4-4.5% in the second half of the current fiscal year and 4.3% for the first quarter of the following fiscal year.
The central bank warned that the inflation outlook has become unfavorable in relation to expectations in the last two months. “The big wedge between wholesale and retail inflation points to the supply bottles and large margins charged to the consumer. While cereal prices may continue to soften with the buffer haarif harvest arrivals and vegetable prices could soften with the winter harvest, other food prices likely “Crude oil prices have picked up optimism about demand recovery, continued OPEC and production cuts and are expected to remain volatile in the near future. Cost pressures continue to affect core inflation, which has remained volatile and could stabilize as economic activity normalizes and demands to rise.” it was added.
Domestic gasoline prices have risen almost always ₹84 per liter last week with global crude prices rising $ 10 per barrel last month to touch $ 50 per barrel. Yet it is the high excise duties imposed on fuel by the central and state governments that have held high fuels amid benign crude oil prices.