The inflation mismatch

Retail and wholesale inflation divergence creates policy dilemma

The government data on Monday showed that inflation based on the wholesale price index rose 3.58 per cent in December. Not only was this lower than what most observers expected, but also lower than the wholesale inflation for November, which was 3.93 per cent. The key factor that led to a lower imprint was the fall in food prices — fruits and vegetables in wholesale markets have become 14 per cent cheaper than in November. As a result, wholesale food inflation decelerated to 4.72 per cent in December from over 6 per cent in November. However, in sharp contrast, inflation