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  1. Double whammy for economy as inflation rises beyond RBI target while industrial output falls

Double whammy for economy as inflation rises beyond RBI target while industrial output falls

The Wholesale Inflation for November has surged to 4.88%, breaching the 4% target set by the Reserve Bank of India, while the Industrial production growth slowed to 2.2% in October.

By: | Updated: December 12, 2017 6:27 PM
The Inflation for November has surged to 4.88%, breaching the 4% target set by the Reserve Bank of India.

The Retail Inflation for November has surged to a 15-month high at 4.88%, breaching the 4% target set by the Reserve Bank of India, from 3.58% in the previous month, government data showed on Tuesday. Meanwhile, the Industrial production growth slowed to 2.2% in October as compared to 4.2% a year ago.

On December 6, given the concern over rising inflation, the central bank kept the repo rate unchanged at 6%, and stance neutral, saying that its decision will depend on data.

The rural inflation also rose to 4.79% from 3.36% in October, while the urban inflation at 4.9% rose to 4.9% from 3.81% in October. According to economists, rising commodity prices globally and a new pay revision for government employees may have led to the rise in inflation. November’s heavy rains “created lots of damage” for perishable fruit and vegetable crops, said Rupa Rege Nitsure, group chief economist at Larsen & Toubro. “We have seen that translated into price rises for onions, tomatoes and other perishable commodities”.

It was 3.63 per cent in November 2016. The previous high was recorded at 5.05 per cent in August last year.
Inflation in protein-rich eggs shot to 7.95 per cent in November on annual basis, as against 0.69 per cent in the previous month. In the fuel and light segment, it was 7.92 per cent, as against 6.36 in October.

For vegetables, it was 22.48 per cent in November. The inflation in the segment was only 7.47 per cent in October.
However, in the pulses segment, the print continued to show the disinflationary trend as it contracted by 23.53 per cent on annual basis. On an overall basis, the inflation in the food segment increased to 4.42 per cent in November as compared to 1.9 per cent in the preceding month.

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