Retail inflation eases to 5.5% in Nov as food prices soften – Times of India

NEW DELHI: Retail inflation eased in November from a 14-month high in the previous month on the back of moderating food prices, while industrial output growth displayed a modest upturn in October.
Data released by the National Statistical Office (NSO) on Thursday showed inflation, as measured by the consumer price index (CPI), rose an annual 5.5% in November, slower than the 6.2% in Oct and almost at the same level of 5.6% in Nov last year. The sharp spike in October had dashed hopes of any rate cut and prompted RBI to hold rates for the 11th consecutive time earlier this month.
The consumer food price index rose 9% during the month, slower than the 10.9% in Oct. Rural inflation continued to remain higher than urban in Nov at around 6%, while urban was at 4.8%.

Back in RBI’s tolerance band

While there was some softening in food prices, it still remained high at 9%. Vegetable prices rose 29.3% during the month, while edible oil inflation touched a 30-month high of 13.3% and experts said vegetables and edible oil prices need careful monitoring.
The easing of price pressures in Nov has triggered hopes of a rate cut in Feb. “Overall, we expect inflation to soften in the coming months led by food inflation; however, rigidity in vegetable and edible oil prices keep the upside pressure high. In our base case, we expect inflation to average 4.6% this fiscal with some upside bias to the forecast and expect a policy rate cut in Feb,” said Dipti Deshpande, principal economist at ratings agency Crisil.
Separate data released by the NSO showed industrial output rose an annual 3.5% in Oct, marginally higher than the 3.1% in the previous month but lower than the 11.9% in Oct last year. Manufacturing sector rose 4.1% in Oct from 3.9% in the previous month.
Experts said that a sustained and broad-based improvement in consumption will be essential to support industrial activity in the coming months.
“Rural demand has been showing signs of improvement. Favourable conditions for rabi sowing, including healthy reservoir levels and improved soil moisture from extended monsoons, are likely to aid agricultural production,” ratings agency CareEdge said in a note.
“This is expected to support the moderation in food inflation by the end of FY25, providing a boost to consumption. However, we need to remain watchful of trends in urban demand, especially considering some signs of slowdown. With external demand remaining pressured, recovery in domestic consumption and investment remains crucial for the performance of industrial activity,” the note added.