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Thursday, December 12, 2013

Retail inflation refuses to ease, rises to 11.24% in Nov

The retail price index-based inflation jumped to an all-time high of 11.24%, driven by high vegetable prices, official data showed today. The inflation stood at 10.09% in October, entering double digits for the first time  in six months.  

The surging prices  of essential commodities were an important issue in the recently concluded assembly elections that saw  a rout of the Congress. Besides political factors, monetary considerations themselves  would not let Reserve Bank of India Governor Raghuram Rajan to ease monetary stance, even as industrial production contracted 1.8% in October. However, growth itself needs attention as industrial growth remained flat during the first seven months of the current  financial year, another set of official data released today showed.


The impact of high retail  inflation could be  seen on industrial  growth itself  as consumer durable goods continued to contract-- by 12% in October. Consumer durables did not  grow at all, in any month of 2013-14.


The consumer price index-based inflation hit rural areas more than urban parts. While it  increased to 10.53% in urban  areas  from 10.20%  in the previous month, the rate of price rise  in rural areas went  up to 11,74% from 10.11%.


The biggest culprit was vegetables.  Inflation in vegetables  zoomed to 61.60% in November against 45.67% in October. One could be stunned to see vegetable prices rising at the rate of 71% in urban areas in November compared to 56.76% in the previous month. The rate of price rise  in vegetables  stood at 57.75% in November compared  to 41.06% in October  in rural areas.


Prime Minister's Economic Advisory Council chairman C Rangarajan expressed the hope that vegetable prices would come down from December, though at the present  these are at  very high levels.


"These are very high numbers and we need  to bring it down. But, indications show us that vegetable prices  at the retail level has come  down in December and inflation would ease in the next month," he said.


Overall, food and beverages  inflation rose to 14.72% from 12.56%  over  the period. Urban areas saw this inflation at 14.55% versus 12.86%. In villages, it stood at 14.90% compared to 12.32%.


Economists think  that RBI would  tighten monetary policy further at  its review  next week. "Inflation will be lower, going forward. But, for the time being inflation will be a matter of concern  for RBI which may raise rates  by 25 basis points, should wholesale price index-based inflation also  be on higher side," Siddharth Shankar  of financial services firm  KASA said.
  
Rajan  had said  inflation has resurfaced. "We are one of the large countries  in the world with the highest CPI (Consumer  Price Index-based inflation)," he had said. The RBI is slated to come  out with its review next  week .


Earlier on Sunday, Congress president Sonia Gandhi had  said  price  rise was an issue in elections.


Inflationary Headaches

 
Oct,  12 Nov, 12 Dec, 12 Jan, 13 Feb, 13 Mar, 13 Apr, 13 May, 13 June, 13 Jul, 13 Aug, 13 Sep, 13 13-Oct Nov, 13
CPI Inflation 9.75% 9.90% 10.56%% 10.79% 10.91% 10.40% 9.30% 9.31% 9.87% 9.64% 9.52% 9.84% 10.09% 11,24%
WPI Inflation 7.32% 7.24% 7.31% 7.31% 7.28% 5.65% 4.77% 4.58% 5.16% 5.85% 6.10% 6.46% 7%  


Note:Base year for CPI inflation is 2010 and that for  WPI  inflation is  2004-05

Source: Ministry of Statistics and Programme  Implementation and Department of Commerce


Source: BS

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