The rate of growth of wholesale prices inflation rose to 7.5 percent in November from 7.0 percent in October. The government has revised the September figure to 7 percent from the 6.5 percent reported earlier, according to an official release.
Food inflation grew more than 95 percent compared to November, 2012. It was mostly vegetables-driven but other food items such as wheat and milk also saw price increases in November from the previous month. LPG prices too grew 5 percent.
Inflation “is proving very costly to our economy in terms of savings, in terms of investment... We need to bring inflation down.... our effort is firmly on controlling inflation,” Reserve Bank Governor Raghuram Rajan had said last week. The Reserve Bank of India (RBI) hiked key interest rates by 0.25 per cent each in the last two reviews to tame inflation. The RBI is scheduled to announce its mid-quarterly review of monetary policy on Wednesday.
Industrial output growth had contracted by 1.8 percent in October.“The upside surprise in both consumer price inflation and wholesale price inflation for November leaves no option for the RBI but to hike the policy rate by 25bps in Wednesday’s monetary policy review, in our view,” said a Deutsche Bank research report issued on Monday. “Although, most of the inflation pressure is supply driven, we think that RBI would still want to maintain a hawkish stance to ensure that inflation expectations (which is firmly in double digit territory as per recent surveys) do not rise further.”
Confederation of Indian Industry Director General Chandrajit Banerjee said in a statement: “Breaking the spiral of rising price pressures is necessary to revive industrial production, augment financial savings and strengthen the foundations of growth.”
“To curb food inflation, there is need for urgent remedial measures for augmenting agriculture supplies with steps such as implementation of the model APMC Act, developing advanced supply chains, lowering procedural hurdles in the way of FDI in retail etc.”