Retail inflation eases

Retail inflation eased to a three-month low in November on the back of moderating food prices but still remained above the RBI’s comfort level, prompting economists to say that a cut in interest rate is ruled out for now. Separate data showed inflation measured by the wholesale price index rose to a nine-month high of 1.6% in November as manufactured product prices hardened.

Retail inflation rose an annual 6.9% in November, slower than the 7.6% in October. Food inflation eased to 9.4% in November, from 11% in the previous month. Rural inflation during the month was at 7.2%, while urban inflation was measured at 6.7%. This is the 12th month in a row that retail inflation has remained above the central bank’s tolerance level. Price pressures in rural areas have remained firm and the gap between rural and urban inflation has widened to its highest level since March.

Economists expect the RBI to continue to hold interest rates for now.

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