Journalism of Courage
Headline inflation shot to a 14-month high of 7.52 per cent during November on account of higher vegetable prices and fuel items,which is likely to see the central bank firming its hawkish stance in its forthcoming policy review. The Reserve Bank of India is scheduled to announce its review of the monetary policy for the third quarter on December 18.
Inflation,as gauged by the Wholesale Price Index (WPI),stood at 7 per cent in October while it was 7.24 per cent during November 2012.
According to the data,the food price index rose 19.93 per year-on-year,the biggest rise since June 2010,while the fuel price index rose 11.08 per cent last month,compared to 10.33 percent in October.
Among food articles,vegetables became expensive 10.63 per cent during the month while built up during the year was 95.25 per cent. Food articles have a weight of over 14 per cent in the WPI.
What further added to the woes of the government and the central bank was the revision of September inflation figure upwards to 7.05 per cent as against the provisional 6.24 per cent,strengthening expectations that the RBI will raise interest rates on Wednesday.
Experts said the numbers reflect that the fight against inflation is far from over and a rate hike is imminent.
The pick-up in underlying inflation can be traced back to the continued pass-through from the weakening of the exchange rate… While improved food supplies may help reduce food inflation in coming months,the sticky and high CPI headline and core inflation is testament to the strong underlying inflation pressures in the economy, Leif Lybecker Eskesen,chief economist for India and Asean,HSBC,said,adding that the RBI will likely deliver another 25 basis point rate hike in the upcoming policy review.
The inflation data comes after dismal performance of the industrial production that contracted 1.8 per cent year-on-year in October,while retail inflation jumped to a nine-month high of 11.24 per cent.
India Inc,while acknowledging the development,sought some relief on the interest rate front for propping up the economic growth.
We hope RBI will take due cognisance of the fact that growth is still feeble and needs support. IIP data released last week indicated negative growth in October 2013. The demand situation has not yet improved, Naina Lal Kidwai,president,Ficci,said.
