Retail inflation benign in November; WPI inflation at 9-month high of 1.55%

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A vegetable vendor in Mumbai, India's financial capital. Photo/IAC

The prices of household items remained moderate in the month of November 2020. Consumer Price Index (CPI) inflation, also known as retail inflation, decreased from 7.61 per cent in October to 6.93 per cent in November, according to the Ministry of Statistics & Programme Implementation.

The rise in food prices also moderated from 11 per cent in October to 9.43 per cent in the last month. However, vegetable prices grew at a higher pace of 15.63 per cent. While the inflation rate remained lower than 10 per cent in all of the states, it remained highest in West Bengal and Andhra Pradesh.

While food articles saw softening in inflation in November, manufactured items witnessed hardening of prices. Inflation in non-food articles was higher at 8.43 per cent in November. Fuel and power basket softened to (-) 9.87 per cent in November.

On the other hand, the prices of wholesale items in India rose at a 9-month high pace in the month of November 2020. Wholesale Price Index (WPI) rose 1.55 per cent on-year in November 2020, after a 1.32 per cent rise in the previous month. It was the fourth straight annual increase in prices and the strongest since February, as cost of manufactured products rose at a faster pace.

The government and the Reserve bank of India are keeping a close watch on the inflation figures, which is likely to play an important role in framing further policies. Also, the high inflation rate is hampering the household income even as the economy is on an upward trajectory, from the record slump faced in the beginning of the current fiscal year 2020-21.

Meanwhile, the double whammy of fall in employment and household incomes have together hit the consumer sentiments in the month of November 2020. While employment fell by 0.9 per cent or 35 lakh during the month, only 4.3 per cent of the households reported an increase in their nominal incomes compared to a year ago, according to the Centre for Monitoring Indian Economy (CMIE). Higher inflation is believed to be one of the major reasons behind the shrinking household income.

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