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Consumer and wholesale inflation jump again in November

Consumer and wholesale inflation jump again in November

India’s retail inflation rose for the second month in a row in November, reaching 4.91% from the 4.48% figure recorded in October. Official figures also show that in some urban area prices rose by 5.54%, with vegetable prices jumping 7.45% from the previous month.

Transport and communication inflation fell slightly to 10.02% in November, from 10.9% in the previous month, despite tax cuts on petrol and diesel.

“With input price pressures forcing producers to raise prices in many sectors, the November retail inflation accelerated slightly faster than we had expected, shrugging off the favourable base effect and the cut in fuel taxes,” said ICRA chief economist Aditi Nayar. She said the fuel tax cuts helped dampen transport and communications inflation by 0.6% over the previous month.

Consumer food price inflation more than doubled from 0.85% in October to 1.87% in November, with oil and fats inflation moderating only mildly from 33.5% in October to 29.7%. However, except for tomatoes and vegetables, prices of many food items corrected downwards.

“A moderation in the CPI inflation for fuel and light, pan, tobacco and intoxicants, and miscellaneous items was outpaced by the rise in the inflation for food and beverages, housing, and clothing and footwear,” Nayar said.

 

Wholesale price inflation surges

India’s wholesale prices inflation peaked at 14.23% in November, up from 12.54% in October. The surge was in part driven by food inflation, which hit a 13-month high, and a continued rise in mineral, fuel and power, and oil and gas prices.

It was the eighth month in a row that India has seen double-digit wholesale price inflation. Predictions that tax cuts on fuel announced early November by central government would cool inflation for producers facing high commodity and freight costs did not come true.

Fuel and power inflation surged to a record level of almost 40% in November, rising sharply over two months from the revised level of 29.5% recorded in September.

Manufactured products recorded a marginal fall month-on-month, with inflation dipping to 11.92% from 12.04% in October. But food inflation, as measured by the wholesale food index, more than doubled from 3.06% to 6.7% in November.

The Wholesale Price Index (WPI) climbed 2.73% on a month-on-month basis, an official statement said, attributing the ‘high rate of inflation’ primarily to the rise in prices of mineral oils, basic metals, crude petroleum and natural gas, chemicals and chemical products, and food products.