November sees drop in food inflation, overall CPI down to 6.93 %

December 14, 2020 06:08 pm | Updated 10:26 pm IST - New Delhi

India’s retail inflation based on the consumer price index (CPI) moderated marginally in November to 6.93%, from 7.61% recorded in October, with food price inflation cooling off to 9.43% from 11% in the previous month.

In rural India, both overall retail inflation and food price inflation, were about 0.5 percentage points higher than the 6.73% and 9.1%, respectively, recorded in urban India. The National Statistical Office (NSO) combines the rural and urban inflation rates to arrive at All India inflation rates.

“The headline CPI inflation for November 2020 printed appreciably lower than our expectations, benefiting from stable vegetable prices at the retail level,” said Aditi Nayar, principal economist at ICRA. “While this provides welcome relief, it is unlikely to prove adequate for any imminent rate easing,” she said.

The Reserve Bank of India, in its monetary policy review earlier this month, had said that inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables. “This constrains monetary policy at the current juncture from using the space available to act in support of growth,” it had noted.


Among the major States, Bihar recorded the highest inflation at 9.8% in November, followed by West Bengal (9.42%), Andhra Pradesh (9.08%) and Telangana (8.99%). On the other end of the spectrum, Delhi, with 3.43% retail inflation, Punjab (5.36%) and Kerala (5.49%), recorded the lowest price rise in the country.

Although lower food inflation has moderated CPI, core inflation still remains high at around 5.5% and protein inflation is still high within the food index, warned Rajani Sinha, chief economist and national director of research at Knight Frank India. “High household inflationary expectations during the pandemic has made the CPI inflation sticky even in a weak demand scenario,” she said.

WPI rises

Wholesale price index-based inflation rose further to 1.55% in November, from 1.48% in October, as per provisional official data released on Monday. Food price inflation moderated from 5.78% in October to 4.27% in November.

“The divergence between retail and wholesale food inflation is increasing and has touched a five-month high of 5.5% in November 2020,” said Sunil Kumar Sinha, principal economist at India Ratings and Research. “We expect the retail inflation to decline to 5.5% to 6.0% range in the last quarter of 2020-21 due to easing food prices. However, sticky core inflation and COVID related inflation will keep headline inflation elevated,” he said.

Inflation in manufactured products, which have a weightage of over 64% in the wholesale price index, touched 2.97% — the highest level recorded in a at least 20 months, suggesting a continued industrial recovery, on the back of 2.1% inflation recorded in October.

Primary articles’ inflation moderated in November to 2.72% from 4.74% in October, led by a 13.2% decline in minerals prices and an 11.11% dip in crude petroleum and natural gas prices.

The fuel and power segment of the wholesale price index however, showed a negative inflation of 9.87%, marginally recovering from the negative 11% inflation recorded in October.

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