Retail inflation touches 17-month low in November

Retail inflation touches 17-month low in November

AgenciesUpdated: Wednesday, May 29, 2019, 04:07 AM IST
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New Delhi: “Retail inflation plunged to a 17-month low in November at 2.33 per cent, mainly on account of decline in prices of kitchen essentials like vegetables, eggs and pulses. The inflation rate, which includes food and energy prices, fell to 2.33 percent on an annual basis, the smallest increase since June 2017 and remaining below the Reserve Bank of India’s (RBI) medium-term target of 4 per cent for a fourth straight month.

The October inflation rate was revised to 3.38 per cent from 3.31 per cent. In the year-ago period (November 2017), it was at 4.88 per cent. Retail inflation, a key input for the RBI to decide on its monetary policy, was lower than what it was in June 2017 when it stood at 1.46 per cent, as per data by the Ministry of Statistics and Programme Implementation (MOSPI). The CSO comes under MOSPI.

The overall food inflation showed a negative print of 2.61 per cent in November against an uptick of 0.86 per cent in October.“The sharp easing in the headline CPI inflation reflects a combination of favorable factors such as the correction in retail fuel prices (and) discomfiting factors such as a deeper disinflation in food prices,” said Aditi Nayar, an economist at ICRA.

Both Nayar and Vivek Kumar, a senior economist at Yes Bank, said they expect the RBI will change their monetary policy stance to ‘neutral’ in February from ‘calibrated tightening’ currently, making a rate rise less likely.Vegetables prices showed a sharp decline with inflation standing at (-)15.59 per cent in November as against (-) 8.06 per cent in the previous month.

For pulses and its products, the rate of deflation slowed a tad at (-) 9.22 per cent from (-) 10.28 per cent. Protein rich eggs inflation came in at (-) 3.92 per cent as against 2.21 per cent in October. For fuel and light category, the rate of price rise eased to 7.39 per cent during the month from 8.55 percent. However, meat and fish turned costlier at 4.99 per cent from 3.02 per cent. For fruits, the inflation moderated to 0.21 per cent from 0.35 per cent.

Last week, the MPC left the repo rate and its stance unchanged, having hiked rates twice by 25 basis points each in June and August and tightened its stance to ‘calibrated tightening’ from ‘neutral’ in October. However, with CPI inflation declining sharply and undershooting the central bank’s projections over the last few months, former RBI governor Urjit Patel had said that if the upside risks to inflation flagged by the MPC did not materialise, there was a possibility of “space opening up for commensurate policy actions”.

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