Retail inflation inches up to 4.91% in November

Food inflation was at 1.87 per cent in November this year compared to 0.85 per cent in the preceding month

India’s retail price inflation rose to a three-month high of 4.91% in November on the back of rising food and fuel prices, which in turn exerted pressure on other goods, data released by the government showed.

Consumer price inflation, however, remained within the Reserve Bank of India’s (RBI) upper tolerance band of 6%. However, core inflation, which consists of non-food, non-fuel component, breached the upper tolerance level and rose to 6.1% as against 5.8% in the previous month.

"…Fuel and transport costs remained the main constituents that pushed the level higher in this reading. These categories exert cost pressure on various input items. However, the extent to which increased costs are passed on to consumers will depend on the strength of demand in the respective product categories. Although not a concern at present, the elevated price levels will discomfort consumers when the demand levels improve," Vivek Rathi, Director, Research, Knight Frank India, said.

According to Aditi Nayar of ICRA, input price pressures forced producers to raise prices in many sectors, which led to the November CPI inflation accelerating slightly faster than their expectation and shrugging off the favourable base effect and cut in fuel taxes.

Food prices that constitute close to half of the consumer price index accelerated 1.87% in November, compared with 0.85% in the previous month. Prices of edible oil rose nearly 30%.

The RBI has warned of risks of uptick in inflation in the coming months.

"The price pressures may persist in the immediate term. Vegetable prices are expected to see a seasonal correction with winter arrivals in view of bright prospects. 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 Q4 of 2021-22 and soften thereafter, RBI Governor Shaktikanta Das had said in the monetary policy review last week.

Check out DH's latest videos: