13 Dec 2023

What led to retail inflation surging to a three-month high

Retail inflation has surged once again, reaching a three-month high of 5.55 percent in November. The spike is attributed to a rise in the prices of food items, including vegetables and grains, according to data released by the National Statistical Office (NSO) on Tuesday. 

In October, the Consumer Price Index (CPI)-based inflation was recorded at 4.87 percent, while in November of the previous year (2022), it stood at 5.88 percent. The inflation rate had peaked at 6.83 percent in August but has been on a downward trend since then.

Inflation rate for food items rose to 8.7 percent in Nov

Official data reveals that the inflation rate for food items rose to 8.7 percent in November, compared to 6.61 percent in October and 4.67 percent in November of the previous year. Food items contribute to approximately 50 percent of the consumer price index. 

Spices experienced a substantial annual inflation rate of 21.55 pc

Notably, spices experienced a substantial annual inflation rate of 21.55 percent, while pulses and their products increased by 20.23 percent, vegetables by 17.7 percent, and fruits by 10.95 percent. Inflation for grains and their products was recorded at 10.27 percent annually. However, retail prices of oils and fats saw a decline of 15 percent.

The NSO data further indicates that rural areas witnessed an inflation rate of 5.85 percent, while urban centers experienced a slightly lower rate of 5.26 percent, resulting in a national average inflation rate of 5.55 percent.

RBI projects consumer inflation to be 5.4 percent for current fiscal


The Reserve Bank of India, in its monetary policy considerations, primarily focuses on retail inflation and aims to maintain it at four percent with a permissible variation of two percent. In its recent monetary policy review, the RBI projected consumer inflation to be 5.4 percent for the current financial year.

Odisha recorded highest inflation

Odisha recorded the highest inflation among states at 7.65 percent, with Bihar, Gujarat, Haryana, Karnataka, Punjab, Telangana, and Rajasthan also reporting inflation rates exceeding six percent. Delhi registered the lowest inflation rate at 3.1 percent.

Sharp increase in vegetable inflation 

Aditi Nair, Chief Economist at ICRA, noted that the sharp increase in vegetable inflation led to an eight percent rise in the overall inflation of food items and beverages. Nair highlighted that core consumer inflation was 4.2 percent in November 2023, a decrease from 4.4 percent in October 2023. 

Describing this as the lowest level of core consumer inflation since the pandemic, Nair emphasized that the sustained decline in core consumer inflation has positively balanced the overall food inflation data in recent months. The NSO gathered price data from 1,114 urban markets and 1,181 rural areas across the country.

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