November CPI Data: India's Retail Inflation At 5.48%; Food Inflation Moderates But Remains Elevated
India’s Consumer Price Index-based inflation for November dropped to 5.48% from October’s 6.21%, meeting estimates.
India's retail inflation moderated in November, led by lower vegetable prices.
India's Consumer Price Index-based inflation moderated in November to 5.48%, compared to 6.21% in October, according to data from the Ministry of Statistics and Programme Implementation on Thursday. Food and beverage inflation eased to 8.2% in November from 9.69% in October. This was led by vegetable prices cooling to 29.33% compared to 42.18% in the same duration.
A Bloomberg poll of economists had pegged the median inflation estimate at 5.5% for November.
The Reserve Bank of India targets retail inflation at 4%, with a tolerance level of two percentage points on either side. In October, inflation was the highest in 14 months and in excess of the RBI's upper tolerance band.
On a sequential basis, inflation declined 0.15% in November.
Core inflation that excludes volatile food and fuel showed a modest downtick to 3.72% from 3.74% a month ago, according to Bloomberg. The downtick was the first since June this year.
"Even with no surprises on the November CPI print, and sequential easing seen in perishable food items, food inflation stayed uncomfortably high at about 9% on an annualised basis, lending pressure to the headline print to stay above 5%," said Madhavi Arora, lead economist at Emkay. The inflation easing head does not guarantee a deep, linear rate cut cycle, she said, adding that the policy trade-offs are acute with a tricky and small window of conventional rate cuts as global dynamics turn more fluid.
Inflation is likely to slow sequentially further, drifting closer to target, according to economists at Barclays, who forecast headline inflation at 5.5% in December as well. "This should allow the MPC to cut the policy repo rate by 25 basis points in Feb 2025," they said.
The central bank projects inflation at 4.8% for the fiscal 2024-25, with the third quarter of the current fiscal estimated at 5.7% and the fourth quarter at 4.5%, driven by lower food prices.
Key Internals (Year-On-Year)
Cereal prices rose by 6.88% after rising by 6.94% in October.
Inflation for meat and fish was 4.67% compared to a rise of 3.17% in the previous month.
Inflation in eggs rose 4.84% after rising by 4.87% last month.
The inflation rate for milk and milk products was 2.85%, compared to 2.97% in the previous month.
Inflation in pulses rose 7.43% after rising by 9.81% last month.
Clothing and footwear inflation rose to 2.75%, compared to 2.7% in the previous month.
Housing prices went up by 2.87%, compared to 2.81% last month.
The top five items showing the highest year-on-year inflation in November are garlic (85.14%), potato (66.65%), cauliflower (47.7%), cabbage (43.58%), and coconut oil (42.13%).
