Overall the inflation in vegetable segment was 8.57 per cent as compared to about 4 per cent in February.
Retail inflation, based on Consumer Price Index, hit a 15-month high of 4.88 per cent in November
Richard Illey, chief economist, (Asia, ex-Japan) at BNP Paribas, talks to Business Standard on inflation and related issues ahead of the Reserve Bank's annual review of monetary policy.
Street expects RBI to keep CRR unchanged, opt for open-market operations to ease liquidity
'We have lived through 10% plus inflation in India and we are aware of the economic pitfall.' 'With the RBI now having formally adopted an inflation target range, they cannot turn a blind eye to the impending risks.'
Inflation measured by the Wholesale Price Index had declined to 6.62 per cent in January. It was 7.18 per cent in December and 7.24 per cent in November.
After 24 months of slowdown beginning in January 2018 before the pandemic and then 18 months of collapse since January 2020, we have become the world's worst performing economy, observes Aakar Patel.
As per official data released on Wednesday, WPI inflation in the food articles category rose to double digits at 11.91 per cent, driven mainly by price rise in onion, cereals and rice.
The RBI's idiosyncratic focus on wholesale price inflation at the expense of retail inflation is a serious policy error.
If the pattern over the last three months is going to continue, the likelihood is that both indices will register inflation rates close to current levels over the next few months.
Wholesale Price Index for the month ended March moderated to 3-year low of 5.96 per cent against Reserve Bank's projection of 6.8 per cent.
The bank is due to review the monetary policy on July 30.
Several experts are of the view that inflationary pressure, including that in food items, may build from October with economic activity gathering steam. However, the price movement in three key items of tomato, onions and potatoes, commonly known as TOP, may give some solace in the months to come. Traders and market watchers said the price movement in all the three will remain within the band sans any unusual spikes.
Use a mix of instruments that will beat both the wholesale and consumer price indices
It can be closer to RBI's perceived comfort level.
The Cabinet on Wednesday approved the National Mission on Edible Oils - Oil Palm (NMEO-OP) with a financial outlay of Rs 11,040 crore to promote domestic cultivation of oil palm in the next five years, and reduce the country's dependence on edible oil imports. The decision comes after Prime Minister Narendra Modi announced the new central scheme on August 15 during his Independence Day speech at Red Fort. Briefing the media, Union Information and Broadcasting Minister Anurag Thakur said the Cabinet approved the NMEO-OP with a focus on the northeast region and the Andaman and Nicobar Islands with a financial outlay of Rs 11,040 crore.
The government on Monday ruled out the possibility of free food-grains distribution to migrants saying there is no panic situation and no complete national lockdown unlike last year.
The average wholesale price inflation for FY14 will come at 5.3 per cent, while the consumer price inflation will average under 9 per cent, which would be a five-year low, the brokerage said.
The forecast has an error margin of four days, which is considered normal
Benchmark shares indices ended marginally higher on Tuesday, amid a volatile trading session, led by oil exploration major ONGC.
Declining inflation may present a case for further monetary policy easing.
The rise in May Wholesale Price Index based inflation has been mainly on account of 31.44 per cent increase in prices of potato, 19.40 per cent in fruits and 12.75 per cent in rice.
His comments poured cold water on hopes that the central bank may have a rethink on rates after the wholesale price index, the main inflation gauge, rose a lower-than-expected annual 7.25 per cent in June, its slowest rise since January, helped by moderation in fuel prices.
However, risks to the outlook stems from possible sub-normal monsoon and higher crude oil prices (on account of the crisis in Iraq)," the Economic Survey 2013-14 tabled in Parliament by Finance Minister Arun Jaitley said.
RBI faces contradictory signals.
Wholesale prices, India's main inflation measure, had risen 6.1 per cent in August.
Food inflation, as measured by Wholesale Price Index, stood at 10.60 per cent in the previous week.
The wholesale price-based inflation hovered over seven per cent through 2012, down from 10 per cent inflation seen in the previous year, reflecting the impact of tight money policy of the Reserve Bank of India.
The central bank is struggling to do so, after unleashing a panicky expansionary policy after the Lehman crisis.
Production in Karnataka and Madhya Pradesh are likely to be higher this year.
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Food prices for consumers also eased to an annual 11.06 percent in August from 11.24 per cent in July.
Experts said onion prices, which are seeing deflation, are also headed to high-inflation territory in the coming months.
Falling core inflation on the back of slowing economic growth is likely to create space for the Reserve Bank to ease monetary policy in the early part of the next year, rating agency Crisil said.
The Sensex ended higher by 138 points at 19,367 and the 50-share Nifty advanced 43 points to close at 5,742.
Tata Motors was the top gainer among the Sensex stocks.
Inflation in food articles, which have a 14.3 per cent share in the WPI basket, however witnessed an increase as onion prices shot up during the month.
The WPI inflation for September rose to 7.81 per cent, from 7.55 per cent in August.
In its monetary and macroeconomic development report, RBI has raised hopes of a rate cut but also flagged some challenges.
Fitch Ratings said with GDP growth of 6.5% and WPI-based inflation of 8.8%, India may have entered into a stagflation period in 2011-12.
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