Press Trust of India
New Delhi, Dec 14: Retail inflation rose for the 4th-month in a row in November, accelerating to 14-month high of 5.41 per cent on sharp pickup in food prices, posing a challenge to further easing of monetary policy by the Reserve Bank. The wholesale price inflation, although in negative zone for the 13th consecutive month, also moved up to (-)1.99 per cent in November as food articles including pulses and onion turned costlier. It stood at (-)3.81 per cent in October.
The consumer price-based retail inflation rose to 5.41 per cent in November, from 5 per cent in October. The rising retail inflation will add to worries of RBI Governor Raghuram Rajan who had left interest rate unchanged earlier this month, targeting to contain retail inflation at 5 per cent in the medium term. The borrowing costs in India are among the highest across major Asian economies. RBI is bracing itself for an expected increase in interest rate by the US Federal Reserve this week and higher retail inflation will only add to his worries. Besides, implementation of the 7th Pay Commission recommendations on pay hike for central government employees may further stoke price pressures. The recommendations are to take effect from January.
India Ratings & Research Chief Economist Devendra Kumar Pant said, “Both Wholesale Price Index and Consumer Price Index inflation rates, although marginally higher than our expectations, are according to trend. Favourable base effect is waning out and this will push both wholesale and retail inflation in coming months.” Retail food inflation shot up in November at 6.07 per cent, up from 5.25 per cent recorded a month ago. Industry chamber Assocham said since the WPI and CPI numbers are broadly in line with expectations it gives room to RBI for further rate cut to ensure pick up in domestic investment cycle.
“The RBI, which is guided by CPI inflation, needs to look at generalised deflationary pressures that the CPI may not adequately capture,” Assocham said. Pant said, “Chances of any more monetary easing in this fiscal are almost zero”. The RBI takes into account retail inflation while deciding monetary policy. As per the retail inflation data, the rate of price rise in pulses and products shot up to as high as 46.08 per cent, while for vegetables it almost doubled to 4 per cent. Seasonal fruits turned costlier further in November with inflation printing at 2.07 per cent. Inflation in meat and fish category was 5.34 per cent; food and beverages – 6.08 per cent and that for non-alcoholic beverages it stood at 4.55 per cent.
