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India's retail inflation rose to 0.71% in November, matching forecasts
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Food price deflation narrowed with some categories showing price increases
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November retail inflation stood at 5.48%, below RBI's 4% target band
India's retail inflation edged up marginally in November, in-line with expectations, while deflation in food prices narrowed.
The Consumer Price Based-inflation was 0.71%, according to data released by the Ministry of Statistics on Friday. Analysts tracked by Bloomberg had estimated the inflation at 0.7%.
In comparison, the CPI was 0.25% in October, the lowest-ever recorded by the government. The November 2024 retail inflation stood at 5.48%.
Retail inflation has remained well below the Reserve Bank of India's 4% target and +/-2% tolerance band for a third straight month and a second consecutive quarter. The central bank has slashed its inflation forecast in the current fiscal to 2% from 2.6% earlier.
The government attributed the increase in headline inflation and food inflation during the month to a mild rise in prices of vegetables, egg, meat and fish, spices and fuel and light.
The category of food and beverage dropped 2.78%, compared to a decline of 3.72% in the previous month. A strong autumn harvest kept supply ample and prices at the stores in check.
Inflation Internals
Food basket
Cereals and products prices up 0.1% vs 0.92% in October
Meat and fish prices up 2.50% vs 1.74%
Egg prices up 3.77% vs 1.33%
Vegetable prices down 22.20% vs decline of 27.57%
Oils and fats prices up 7.87% vs 11.17%
Pulses and products prices down 15.86% vs decline of 16.15%
Milk and products prices up 2.45% vs 2.35%
Spices prices down 2.89% vs decline of 3.29%
Sugar and Confectionery prices up 4.02% vs 4.02%
Housing prices went up by 2.95% (vs 2.96% in October), clothing and footwear prices by 1.49% (vs 1.7%) and fuel and lighting prices by 2.32% (vs 1.98%).
Core inflation, which excludes the volatile food and fuel prices, was steady at 4.4%.
Headline CPI for FY26 will likely undeshoot RBI's estimate of 2% by 15-20 basis points, according to Garima Kapoor, economist at Elara Capital. "With visibility of the print remaining below 4% in Q1FY27, we believe room for another 25 bps rate cut is still open."
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