NEW DELHI: The country’s inflation based on the wholesale price index (WPI) came in at (-)1.99 per cent in November, the highest level since January, compared with (-)3.81 per cent in the preceding month, mainly on account of higher prices of pulses and onion.
Moreover the retail inflation, as measured by the consumer price index, rose to 5.41 per cent in November, data released by the statistics office on Monday showed, higher than 5 per cent in the previous month.
The prices of food and vegetable items refuse to show signs of moderation. Pulse prices shot up by 58.17 per cent in November on a year-on-year basis, while onion prices rose by 53 per cent and vegetables by 14 per cent.
The overall food inflation rose to 5.20 per cent in November from 2.44 per cent in October.
The more worrying part is the spike in the prices of these food and vegetables have been persisting in the recent months.
According to data released by the Commerce Ministry, the fuel and power index came in at (-)11.09 per cent from (-)16.32 per cent the previous month. For manufactured products which have a combined weightage of 65 per cent in the WPI index, the rate of price fall declined to 1.42 per cent from 1.67 per cent earlier. Jahangir Aziz, economist at JP Morgan said, “We need to look at what is happening to manufacturing inflation because that is the one that tells us where state of demand in the economy. So, that is where the concern is that is this all because of imported deflation through decline in commodity prices or is this also reflecting the weakness in demand.”
Even the Rerve Bank of India has acknowledged the problem of persisting high food inflation even when it has drawn comfort from the decline in overall inflation.
Seasonal fruits turned costlier further in November with inflation printing at 2.07 per cent. Inflation in meat and fish category was 5.34%; food and beverages - 6.08 per cent and that for non-alcoholic beverages it stood at 4.55 per cent.
However, inflation in milk and products, eggs and fuel and light category was slightly down in November. In the rural areas, retail inflation rose to 5.95 % and for urban sector it was at 4.71% during the month.
RBI is more likely to achieve its January 2016 inflation target, achieving medium-term target of 5 per cent would remain challenging. Chances of any more monetary easing in this fiscal are almost zero, he said.
The Reserve Bank takes into account retail inflation while deciding on its monetary policy. The central bank’s retail inflation target is 5.8 per cent by January 2016. In its bi-monthly monetary policy review in the beginning of this month, RBI Governor Raghuram Rajan had maintained status quo in its key repo rate as retail inflation has been on a rising trend for past few months.
(With agency inputs)