Retail inflation slowed to a two-year low in November on the back of cooling food inflation and impact of the government's move to scrap some high value currency notes on demand, triggering hopes of an interest rate cut when RBI reviews monetary policy in February .
Inflation, measured by the consumer price index (CPI) rose an annual 3.6% in November, lower than previous month's 4.2% increase, and slowest since November 2014.
Food inflation in November slowed to 2.1%, slower than October's 3.3% rise. Retail Inflation in rural areas was 4.1% in November, while in urban areas it was 3%.
The latest retail inflation reading was sharply below RBI's March-end inflation estimate of 5% and below its medium target of 4%. Vegetable prices fell 10.3% in November, while price of pulses cooled to 0.2% during the month, compared to double digit increase in previous months. Prices of sugar and confectionary remained a pressure point and rose 22.4% in November.
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