NEW DELHI: Retail inflation eased in November to 5.48% compared to 6.21% in October, giving a relief to both common man and policymakers, who have been struggling with the question of growth over inflation.
Though the inflation has come down below the RBI’s upper tolerance level of 6%, it is still higher than the targeted inflation of 4%.
The moderation in November inflation was mainly on account of 2.2% month-on-month decline in food prices. Though at 9.04% year-on-year growth, food inflation remained at higher levels. Food and beverages account for 45.86% weightage in the Consumer Price Index (CPI), which measures retail inflation.
The easing in inflation was expected as – the main seasonal factor for high food inflation – come down during winters. In November, vegetable prices showed a 4.5% month-on-month decline. However, year-on-year, vegetable prices have surged 29.33%. The month-on-month fall in prices has been witnessed across other categories like fruits, and meat and fish, pulses, etc.
However, edible oil and fat prices remain stubborn as they grew by 3% month-on-month and 13.28% year-on-year. Edible oil prices continue to rise because import duties on edible oil were increased in September this year to protect local farmers.
“In the coming weeks, we expect food prices to ease sequentially. Vegetable prices tend to come down in December when the kharif crop enters the market. A high base of last year will also help in lowering the reading,” says Dipti Deshpande, principal economist, Crisil. The non-food component of CPI remained low at 3.1% supported by the recent softening in global energy and commodity prices. Core inflation was lower than expected, remaining unchanged at 3.7% in November and October.
According to Gaura Sen Gupta, chief economist, preliminary estimate for December CPI inflation is tracking at 5.8%, after building-in some moderation in food inflation.
RBI in its recent monetary policy statement has projected the Q3 inflation at 5.7% and Q4 inflation at 4.5%. For the full-year, it revised the inflation upwards to 4.8% from 4.5% earlier.
IIP growth rises 3.5% in October
India’s industrial production (IIP) growth surged 3.5% year-on-year in October 2024, primarily due to poor performance of mining, power and manufacturing, official data showed on Thursday. The IIP recorded a growth of 11.9% in October 2023, as per a Ministry of Statistics & Programme Implementation statement.
However, on a sequential basis, the factory output in October 2024 rose to 3.5% from 3.1% in September and a contraction of 0.1% in August this year. The growth in the factory output, measured in terms of the IIP, in April-October worked out to be 4% against 7% in the year-ago period.