The wholesale inflation, measured using the Wholesale Price Index, was expected to moderate to 2.20 per cent, according to a Reuters poll.
India’s retail inflation eased to 5.48 per cent in November, after breaching the RBI’s 6 per cent upper tolerance band in October, as the arrival of fresh produce helped moderate soaring vegetable prices.
The prices eased due to a bumper summer crop harvest, aided by a favourable monsoon. Food inflation, which makes up around half of the overall Consumer Price Index (CPI) basket, eased to 9.04 per cent in November from 10.87 per cent in the previous month.
ALSO READ: India’s retail inflation eases to 5.48% in Nov from 6.21% in Oct as food prices moderate
A good monsoon, adequate reservoir levels and higher minimum support prices are also seen boosting winter crop sowing and production, in turn lowering food inflation in the coming months, according to the government.As a significant portion of 1.4 billion people spend most of their income on food, India’s inflation index is heavily influenced by food prices. Experts had earlier indicated that a higher food inflation number could keep overall inflation from declining significantly.
RBI on inflation
RBI’s Monetary Policy Committee (MPC) last week, downgraded its growth forecast for this fiscal year to 6.6% from 7.2%, while increasing its inflation estimates to 4.8% from 4.5% for the same period, highlighting concerns over food inflation.
The MPC retained its neutral stance, signalling room for potential rate cuts if inflationary pressures ease in the coming months.
Food inflation is expected to remain elevated through the third quarter of FY25 before showing signs of moderation in the fourth quarter, former RBI Governor Shaktikanta Das said in his statement during the MPC meeting. “High inflation reduces the disposable income in the hands of consumers,” he added.
Das noted that increasing incidents of weather events, financial volatility and geopolitical developments pose upside risks to inflation.
