NEW DELHI:
Food inflation
jumped to a 71-month high in November pushing wholesale price inflation to a higher trajectory and helped break a three-month trend of deceleration.
Data released by the commerce and industry ministry on Monday showed inflation as measured by the wholesale price index rose an annual 0.6% in November, higher than the 0.2% in the previous month, but lower than the 4.5% recorded in the year-ago period.
The increase in inflation during November was largely led by a sharp surge in food article inflation which shot up an annual 11.1% during the month rising from the 9.8% posted in the previous. Earlier data showed that food inflation under
retail inflation
had shot up to double digit in November after nearly six years, led by a surge in
vegetable prices
.
Onion price inflation rose 172.3% in November, rising from previous month’s 119.8% in October. Vegetables rose an annual 45.3% during the month, rising from 38.91% in the previous month.
Inflation in the manufactured goods continued to witness deflation for the third straight month at (-) 0.8%, unchanged from a month ago and lower than the 4.2% recorded in November 2018 which economist said indicated a lack of pricing power for manufacturers.
“We are expecting the
WPI inflation
to be little lower than 1% during the year mainly on account of deflationary trend in the manufacturing and fuel and power segment. Going ahead the base effect will fade which might lead to some uptick in the overall wholesale inflation,” said Madan Sabnavis, chief economist at CARE Ratings.
Aditi Nayar, principal economist at ratings agency ICRA, said the CPI inflation exceeded the WPI inflation for the seventh month in a row in November 2019. “The wedge between the two widened substantially during the month, with the sharp uptick in the retail inflation (to +5.5% in November 2019 from +4.6% in October 2019) compared to the milder pickup in wholesale inflation (to +0.6% from +0.2%),” said Nayar.
She said while the surge in vegetable prices will eventually reverse, the elevated inflation for pulses needs to be watched with caution, unless rabi sowing picks up pace. Economists expect the
RBI to hold rates given the uptick in inflation. “We continue to expect a pause in the next
monetary policy
review, based on the expectation that the CPI inflation will harden further in December 2019,” said Nayar.
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