Primary food inflation at 13-month high
India’s wholesale price inflation rose to a new high of 14.23% in November from 12.54% in October, led by a rise in primary food inflation, which hit a 13-month high, and minerals, fuel and power, as well as Simultaneously, there was a steady increase in oil. and gas prices.
Economists have termed the record wholesale inflation print as the eighth consecutive month that India has seen inflation in double digits, a negative surprise. It is expected that the tax cut on fuel announced by the Center in early November may provide some relief to producers who are battling high commodity and freight costs.
Fuel and power inflation, in fact, hit a record low of around 40% in November, rising sharply in two months from a revised level of 29.5% recorded in September. Significant growth was also seen in most categories beyond fuel.
Manufactured products posted a marginal month-on-month decline, with inflation falling to 11.92% from 12.04% in October, but food inflation, as measured by the Wholesale Food Index, rose to 6.7% in November from 3.06%. Inflation in primary articles also nearly doubled to 10.34% from 5.2% in October.
The Wholesale Price Index (WPI) climbed 2.73% on a month-on-month basis, mainly due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas due to ‘higher inflation’, an official statement said. rate’ was attributed. , chemicals and chemical products, food products etc.
ICRA Chief Economist Aditi Nair said the record inflation of 14.2% in November 2021 came as a shock, as most non-core categories displayed inflation rates that were much higher than expected. Inflation as measured by WPI had risen by 2.29% in November 2020.
“The unseasonal increase in vegetable prices, as well as increased inflation for egg, meat and fish, and spices and condiments, mitigated the change in primary food inflation from a deflationary 13-month high of 4.9% in November 2021. 1.7% in the last month,” she said.
Within food items, inflation in eggs, meat and fish rose to 9.66% in November from 1.98% in October, fruits registered 15.5% inflation compared to 8.2% a month ago, and wheat prices rose to 8.14 per cent in October. Inflation of % to 10.14% was observed. , Vegetable prices trend changed after at least five months of negative inflation, which was last recorded at -18.5%, to witness inflation of 3.91% in November.
“A fall in the base is likely to lead to a further rise in the inflation rate for primary food items in the current month, although a gradual decline in prices of various food items is expected,” Ms Nair warned.
While prices of various food items have shown a seasonal decline and prices of several items have corrected somewhat after the reality check provided by Omicron Editions, the rupee has depreciated in recent sessions, reflecting moderation in WPI. will reduce the limit. Inflation in December, she explained.
ICRA now expects wholesale price inflation to average 11.5-12% in 2021-22, with headline and core inflation expected to print in double digits in the next three months and one month respectively.