A vegetable vendor awaits customers while arranging onions in his cart at a market in Prayagraj.(AP photo)
A vegetable vendor awaits customers while arranging onions in his cart at a market in Prayagraj.(AP photo)

India’s retail inflation eases in November, is still above RBI’s 4% benchmark

Wholesale prices, however, climbed to their highest level since February due to costlier manufactured items, rising 1.55 per cent in November from 1.48 per cent in the previous month, data released separately showed.
New Delhi, Delhi | By Zia Haq | Edited by Niyati Singh
UPDATED ON DEC 15, 2020 02:11 AM IST

India’s retail inflation eased slightly to a three-month low in November to stand at 6.93 per cent from a year ago, after a six-year high of 7.61 per cent in October, a reading that is still well above the Reserve Bank of India’s acceptable limit of 4 per cent (+/-2) for the eighth straight month, data released on Monday by the ministry of statistics showed.

Wholesale prices, however, climbed to their highest level since February due to costlier manufactured items, rising 1.55 per cent in November from 1.48 per cent in the previous month, data released separately showed.

Retail inflation as measured by the Consumer Price Index (CPI) in food and beverages dropped to 8.76% in November, compared to 10.16% in the previous month. However, core inflation (price rise in non-food, non-fuel segments) rose to the highest in nearly two years at 5.51% in November against 5.46% in October.

Vegetable inflation fell to 15.63% in November compared to 22.5% in October while pulses rose 17.91% compared to 18.34% last month.

There is a considerable divergence between retail and wholesale prices. In its latest assessment released last month, the RBI pointed to persistent supply disruptions that were first triggered by the Covid-19 lockdown.

“The substantial wedge between wholesale and retail inflation points to the supply-side bottlenecks and large margins being charged to the consumer. While cereal prices may continue to soften with the bumper kharif harvest arrivals and vegetable prices may ease with the winter crop, other food prices are likely to persist at elevated levels, it had said.

Since March, the RBI has cut down its main repo rate by 115 basis points to cushion the blow from the Covid-19 pandemic crisis on the economy. Earlier this month, RBI’s monetary policy committee had said that they expect the economy to contract 7.5 per cent in the current financial year from March 2021.

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