Inflation soars to 14-month high of 7.52% in Nov

Food inflation expected to moderate

India's wholesale price inflation rose to a 14-month high of 7.52 per cent in November from 7 per cent in the previous month mainly on account of a sharp increase in prices of food articles. The food articles inflation rate rose to an over three-year high of 19.93 per cent in November.

 Vegetable prices shot up more than 95 per cent compared to about 80 per cent increase in October, government data showed.

 The higher headline inflation print comes on the back of last week’s all-time high retail inflation number of 11.24 per cent, putting a renewed pressure on the government to augment supply side responses and leaving a little room for the Reserve Bank of India to have a re-think on the interest rate hike in its December 18 monetary policy.

 The food articles inflation rate rose to an over three-year high of 19.93 per cent in November. The rise in prices of vegetables, potato, milk and cereals pushed up food articles inflation. Potato prices rose close to 31 per cent on month in November, while those of overall vegetables surged nearly 11 per cent. Onion prices continued to decline in November, with prices falling over 5 per cent month-on-month.

Most economists said the overall WPI inflation rate in November was spiked by the rise in food prices, but they expect food prices to moderate hereon. Analysts also wondered that in a year of record food grain production, the country has been facing rise in food prices. Experts said the offloading of procured food grains has not happened giving rise to food inflation.

 Headline inflation for September too was revised upwards to 7.05 per cent from the earlier estimate of 6.46 per cent.  The RBI is due to announce its mid-quarter review of monetary policy on Wednesday. Last week, RBI Governor Raghuram Rajan said the central bank was "very uncomfortable" with the current levels of inflation. Rajan has presented two monetary policy reviews, and has raised the key policy repo rate, by 25 bps in each of them.

"We hope RBI will take due cognisance of the fact that growth is still feeble and needs support," industry chamber Ficci said.

 “To curb food inflation, there is a need for urgent remedial measures for augmenting agriculture supplies with steps such as implementation of the model APMC Act, developing advanced supply chains,” CII said.

 Inflation has become a politically sensitive issue and the Congress has suffered a drubbing in four state assembly elections largely on this issue.