The median of 17 estimates indicates that retail inflation, measured by the Consumer Price Index (CPI), probably dropped to 5.6% in November from a 14-month high of 6.21% in October. The primary cause of the dramatic drop in headline print was the cooling costs of food, particularly vegetables.
The CPI inflation rate in November 2023 was 5.55%. On Thursday, the National Statistical Office (NSO) will make public the month’s retail inflation figures. The retail inflation index probably fell 0.1% month over month in November at the anticipated 5.6% print, marking the first consecutive reduction in the previous ten months.
Economists say vegetable inflation, which shot up to 42% in October, likely moderated to about 27% in November. The significant fall in the group’s inflation rate was primarily a consequence of a decline in tomato prices. According to the Department of Consumer Affairs, tomato prices fell 17% on the month, while potato and onion prices rose by 1% and 4%, respectively.
Edible oil prices rose about 5-6% on month in November, while pulses’ prices increased marginally by around 1%. Cereal prices (rice and wheat) remained largely unchanged. Core inflation, meanwhile, is expected to inch up to 3.8% in November from 3.7% in October. Economists say core inflation will likely increase up to 4% in the next three months, as commodity prices rise.
According to the Reserve Bank of India’s (RBI) December monetary policy statement, “businesses expect growth in selling prices to accelerate from Q4FY25 and pressures from input costs to remain elevated.”
According to analysts, there is still hope for food inflation, as Kharif production is expected to be strong. “Healthy reservoir levels and adequate soil moisture from extended monsoons continue to favor Rabi sowing prospects. Therefore, with the coming of new crops, we continue to believe that inflationary pressures within the food basket will subside.
