India's retail inflation inches up to 4.91% in Nov, highest in 3 months
As per the data, inflation in the rural areas was 4.29 percent, and in urban India, it was 5.54 percent.
Retail inflation inched up to a three-month high of 4.91 percent in November, mainly due to an uptick in food prices, according to government data released on Monday.
The Consumer Price Index (CPI) based inflation, however, remained within the comfort zone of the Reserve Bank of India. The government has mandated the central bank to keep the inflation at four percent (+/- 2 percent).
The annual CPI inflation was 4.48 percent in October 2021 and 6.93 percent in November 2020. It had eased from 5.3 percent in August to 4.35 per cent in September and then moved up to 4.48 percent in October.
As per the data released by the National Statistical Office (NSO), inflation in vegetables segment was negative on a yearly basis. However, it was on the higher side as compared to the previous month.
The rate of price rise in the oils and fat segment was 29.67 percent year-on-year. However, the inflation was lower in November over October.
On the other hand, inflation in the fruit basket was higher in November over the preceding month.
Overall, the inflation in the food basket was 1.87 percent in November as compared to 0.85 percent a month earlier. However, it was significantly down from 9.5 percent in November 2020.
With the Centre and state governments reducing taxes on petrol and diesel, inflation in the fuel and light segment was low on a sequential basis.
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Aditi Nayar, Chief Economist of ICRA, said that the recent correction in prices of many food items other than tomatoes, has provided relief for the inflation trajectory, especially given the unfavourable base effects that lie ahead.
“In our assessment, as long as the CPI inflation remains within the target of 2-6 percent, the Monetary Policy Committee and RBI will prefer to prioritize growth, and maintain policy support to impart durability and sustainability to the recovery,” Nayar said.
Morup Namgail, Head-Agritech, IFFCO Kisan Sanchar, said that the comforting feature for the common man is the declining prices of vegetables on an annual basis, which to a large extent can be attributed to seasonal factors and decline in transport cost on account of reduction in prices of petrol and diesel.
The Reserve Bank, which mainly factors in the retail inflation while arriving at its bi-monthly monetary policy, has been tasked by the government to keep the inflation at four percent, with a margin of two percent on either side.
The RBI had said last week that over the rest of the year, inflation prints are likely to be somewhat higher as base effects turn adverse. “However, it is expected that headline inflation will peak in the fourth quarter of the current fiscal and soften thereafter,” the RBI said.
The RBI has projected the CPI inflation at 5.3 percent for 2021-22.
The NSO collects the price data from selected 1,114 urban markets and 1,181 villages covering all states and union territories through personal visits.
During November 2021, NSO collected prices from 99.7 percent villages and 98.4 percent urban markets.
As per the data, inflation in the rural areas was 4.29 percent, and in urban India, it was 5.54 percent.
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Madhavi Arora, Lead Economist, Emkay Global Financial Services, said, “The inflation print for November has come out a tad lower our expectations, but does little to change the narrative ahead.”
“Going ahead, we remain watchful of various inflation push and pull such as excise cut-led fall in fuel price hike, telecom tariff hike, volatility in vegetables prices, correction in global commodity prices and early signs of easing supply chains globally (and possible reversal of the same amid Omicron strain),” Arora added.
(With inputs from Agencies)
