WPI Inflation Declines to 21-Month low of 5.85 % in Nov

The wholesale price-based inflation declined to a 21-month low of 5.85 per cent in November on easing prices of food, fuel and manufactured items. After remaining in double digits for 19 months, the wholesale price index (WPI) based inflation declined to 8.39 per cent in October. The inflation was  14.87 per cent in November 2021.

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Key Things To Know:

Decline in the rate of inflation in November 2022, is primarily contributed by fall in prices of food articles, basic metals, textiles, chemicals & chemical products and paper & paper products as compared to the corresponding month of the previous year.

Crux Of The Matter:

• A lower level of inflation recorded in November 2022 was last seen in February 2021, when WPI inflation printed at 4.83 per cent.
• Inflation in food articles in November was 1.07 per cent against 8.33 per cent in the previous month.
• Inflation in vegetables was (-) 20.08 per cent during the month compared to 17.61 per cent in October.
• In the ‘Fuel and power’ basket, inflation was 17.35 per cent, while in manufactured products, it was 3.59 per cent in November.

A Tight Situation:

The Reserve Bank takes into account retail inflation for formulating monetary policy. Data released earlier this week showed retail inflation dipped below the RBI’s upper tolerance level of 6 per cent for the first time in 11 months in November on softening food price index.

Though the consumer price index (CPI) based retail inflation declined to 5.88 per cent in November, experts still expect the RBI to hike interest rates by another 25 basis points in its February monetary policy review.

The Reserve Bank had said the worst of inflation is behind us, but there is no room for complacency and hiked the benchmark policy rate by 35 basis points to 6.25 per cent. The central bank also said it will keep ‘Arjuna’s eye’ (keen focus) on the evolving inflation dynamics and projected inflation to remain above 4 per cent for the next 12 months.

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