Retail inflation likely dipped in Nov, but stayed above 7%: Economists

The fall in retail inflation was from 7.61% in October to 7.10% in November, suggests a Reuters poll

Vegetable market inflation
Retail inflation is the inflation, or rise in prices of goods sold at retail shops or markets | Photo: iStock

India’s retail inflation has remained above the Reserve Bank of India’s comfort zone of 2-6% for seven consecutive months, predicted a Reuters poll of economists, adding, it dipped in November from that of October.

The fall in retail inflation was from 7.61% in October to 7.10% in November, suggests the poll which was held during December 4-9 and saw the participation of 48 economists. This means the retail inflation would still remain above 7% for the third consecutive month.

Retail inflation is the inflation, or rise in prices of goods sold at retail shops or markets. The higher the rate of inflation, the more unaffordable a good becomes for the poor consumers. A seven month inflation streak like this hasn’t been seen in the past six years.

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In an article by The Wire, Madan Sabnavis, chief economist at CARE Ratings justified the drop in retail inflation in November by stating some moderations were made in vegetable and pulses prices. Meanwhile, he pointed out that petrol prices had increased.

The central bank had last week decided to leave its benchmark interest rate unchanged at 4%, out of concerns over elevated inflation. But it had maintained an accommodative stance, implying more rate cuts in future if need arises to support the economy hit by the COVID-19 pandemic.

Reports quote the Reuters poll as further saying the government’s stimulus isn’t enough to boost the economy which will suffer its worst contraction this fiscal year due to the COVID-19 pandemic.

According to further predictions, industrial output saw a 1.1% rise in October compared to the year-ago period, banking on strong production ahead of the festive season, and a month after it finally turned positive for the first time since February. The forecast further says infrastructure output contracted 2.5% in October.

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