The retail inflation surged to 5.54 per cent in November from 4.62 per cent in October, which is the highest since July 2016. The Ministry of Statistics and Program Implementation released the data on Thursday.
The spike in the Consumer Price Index (CPI) — which is also called retail inflation — was caused by a rise in food prices. The Consumer Food Price Index (CFPI)/ food inflation rate, stood at 10.01 per cent.
As a consequence of the 400 per cent rise in onion prices since March, the inflation in vegetables skyrocketed to 35.99 per cent from 26.10 per cent in October.
Whereas, pulses saw an increase of 13.94 per cent from 11.92 per cent. And, meat and fish witnessed an increase of 9.75 per cent from 9. 38 per cent.
The current rate of inflation has stayed within the Reserve Bank of India’s (RBI) target of keeping inflation at 4 (+/- 2) per cent. In its recent Monetary Policy Committee (MPC) meeting, the RBI decided to keep the Repo Rate unchanged at 5.15 per cent, despite low economic growth, to keep a check on inflation.
Core inflation — which doesn’t include fuel and food — remained unchanged at 3.5 per cent.
Reacting to the inflation figures, Rupa Rege-Nitsure, Group Chief Economist, of L&T Financial Services, said, “IIP-CPI mix clearly signals that India is entering into a kind of ‘Stagflationary’ phase. This certainly vindicates the RBI’s pause in rate-cutting cycle,” as quoted by The Economic Times.
Suvodeep Rakshit, Senior Economist, at Kotak Institutional Equities, said, “CPI inflation in November continued to be impacted by higher food inflation. This is primarily due to supply-led higher prices of vegetables and pulses. Core inflation at around 3.4% remained benign implying that demand-led inflation remained low.
He further explained that over the next few weeks, part of the food inflation will be favourably impacted as a new supply of vegetables hits the market. “Based on the RBI’s MPC thought process on the latest policy response, and our expected evolution of the inflation trajectory, the MPC is unlikely to cut repo rate in the February policy and possibly in subsequent policies too,” Rakshit added.
Also Read: Explained: All You Need To Know About Personal Data Protection Bill, 2019
