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The retail price index-based inflation jumped to an all-time high of 11.24%, driven by high vegetable prices, official data showed today. The inflation stood at 10.09% in October, entering double digits for the first time in six months.
The surging prices of essential commodities were an important issue in the recently concluded assembly elections that saw a rout of the Congress. Besides political factors, monetary considerations themselves would not let Reserve Bank of India Governor Raghuram Rajan to ease monetary stance, even as industrial production contracted 1.8% in October. However, growth itself needs attention as industrial growth remained flat during the first seven months of the current financial year, another set of official data released today showed.
The impact of high retail inflation could be seen on industrial growth itself as consumer durable goods continued to contract-- by 12% in October. Consumer durables did not grow at all, in any month of 2013-14.
The consumer price index-based inflation hit rural areas more than urban parts. While it increased to 10.53% in urban areas from 10.20% in the previous month, the rate of price rise in rural areas went up to 11,74% from 10.11%.
The biggest culprit was vegetables. Inflation in vegetables zoomed to 61.60% in November against 45.67% in October. One could be stunned to see vegetable prices rising at the rate of 71% in urban areas in November compared to 56.76% in the previous month. The rate of price rise in vegetables stood at 57.75% in November compared to 41.06% in October in rural areas.
Prime Minister's Economic Advisory Council chairman C Rangarajan expressed the hope that vegetable prices would come down from December, though at the present these are at very high levels.
"These are very high numbers and we need to bring it down. But, indications show us that vegetable prices at the retail level has come down in December and inflation would ease in the next month," he said.
Overall, food and beverages inflation rose to 14.72% from 12.56% over the period. Urban areas saw this inflation at 14.55% versus 12.86%. In villages, it stood at 14.90% compared to 12.32%.
Economists think that RBI would tighten monetary policy further at its review next week. "Inflation will be lower, going forward. But, for the time being inflation will be a matter of concern for RBI which may raise rates by 25 basis points, should wholesale price index-based inflation also be on higher side," Siddharth Shankar of financial services firm KASA said.
Rajan had said inflation has resurfaced. "We are one of the large countries in the world with the highest CPI (Consumer Price Index-based inflation)," he had said. The RBI is slated to come out with its review next week .
Earlier on Sunday, Congress president Sonia Gandhi had said price rise was an issue in elections.
Inflationary Headaches
The surging prices of essential commodities were an important issue in the recently concluded assembly elections that saw a rout of the Congress. Besides political factors, monetary considerations themselves would not let Reserve Bank of India Governor Raghuram Rajan to ease monetary stance, even as industrial production contracted 1.8% in October. However, growth itself needs attention as industrial growth remained flat during the first seven months of the current financial year, another set of official data released today showed.
The impact of high retail inflation could be seen on industrial growth itself as consumer durable goods continued to contract-- by 12% in October. Consumer durables did not grow at all, in any month of 2013-14.
The consumer price index-based inflation hit rural areas more than urban parts. While it increased to 10.53% in urban areas from 10.20% in the previous month, the rate of price rise in rural areas went up to 11,74% from 10.11%.
The biggest culprit was vegetables. Inflation in vegetables zoomed to 61.60% in November against 45.67% in October. One could be stunned to see vegetable prices rising at the rate of 71% in urban areas in November compared to 56.76% in the previous month. The rate of price rise in vegetables stood at 57.75% in November compared to 41.06% in October in rural areas.
Prime Minister's Economic Advisory Council chairman C Rangarajan expressed the hope that vegetable prices would come down from December, though at the present these are at very high levels.
"These are very high numbers and we need to bring it down. But, indications show us that vegetable prices at the retail level has come down in December and inflation would ease in the next month," he said.
Overall, food and beverages inflation rose to 14.72% from 12.56% over the period. Urban areas saw this inflation at 14.55% versus 12.86%. In villages, it stood at 14.90% compared to 12.32%.
Economists think that RBI would tighten monetary policy further at its review next week. "Inflation will be lower, going forward. But, for the time being inflation will be a matter of concern for RBI which may raise rates by 25 basis points, should wholesale price index-based inflation also be on higher side," Siddharth Shankar of financial services firm KASA said.
Rajan had said inflation has resurfaced. "We are one of the large countries in the world with the highest CPI (Consumer Price Index-based inflation)," he had said. The RBI is slated to come out with its review next week .
Earlier on Sunday, Congress president Sonia Gandhi had said price rise was an issue in elections.
Inflationary Headaches
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| Oct, 12 | Nov, 12 | Dec, 12 | Jan, 13 | Feb, 13 | Mar, 13 | Apr, 13 | May, 13 | June, 13 | Jul, 13 | Aug, 13 | Sep, 13 | 13-Oct | Nov, 13 | |
| CPI Inflation | 9.75% | 9.90% | 10.56%% | 10.79% | 10.91% | 10.40% | 9.30% | 9.31% | 9.87% | 9.64% | 9.52% | 9.84% | 10.09% | 11,24% | |
| WPI Inflation | 7.32% | 7.24% | 7.31% | 7.31% | 7.28% | 5.65% | 4.77% | 4.58% | 5.16% | 5.85% | 6.10% | 6.46% | 7% |
Note:Base year for CPI inflation is 2010 and that for WPI inflation is 2004-05
Source: Ministry of Statistics and Programme Implementation and Department of Commerce
