Consumer inflation moderates slightly to 5.5% in November

The decline in inflation in November 2024 is mainly due to the decline in inflation in the ‘food & beverages’ group
| Photo Credit: PTI

India’s retail inflation cooled slightly to 5.5% in November from a 14-month high of 6.2% in October, but remained significantly elevated for rural consumers at 5.95%, while dropping to 4.8% for their urban counterparts.

Food inflation, which has been a bugbear for hopes of an interest rate cut, also eased a tad from October’s 15-month peak of 10.9% to 9.04% in November. Rural consumers experienced a slightly higher uptick of 9.1% while urban consumers saw an 8.74% gain in prices.

This marks the third straight month of food inflation staying above the 9% mark, and overall consumer price rise of over 5%.

Vegetable prices ease

Vegetables inflation eased from a 57-month high of 42.2% in October to 29.33%. However, oils and fats inflation shot up 13.3%, the highest pace in two and a half years, and significantly over the 9.5% rise in the previous month and the mere 2.5% inflation in September.

“The decline in inflation in November 2024 is mainly due to decline in inflation in ‘food & beverages’ group,” the National Statistics Office (NSO) said, pointing to a significant drop in price rise observed in vegetables, pulses, sugar, fruits, eggs, milk, spices, transport, communication, and personal care and effects. But these moderations were only marginal in some cases.

On the other hand, the highest inflation at an all-India level in November was recorded in garlic (85.14%), potato (66.65%), cauliflower (47.7%), cabbage (43.58%), and coconut oil (42.13%). On a month-on-month basis, the Consumer Price Index was 0.15% lower than October and the Food Price Index was down 0.6%, with urban consumers experiencing greater relief.

Fruits inflation eased only marginally from 8.4% in October to 7.7% in November. Pulses inflation dropped to 5.4%, the lowest in at least two years, and cereals inflation stood at 6.9%. Personal care and effects inflation remained elevated at 10.4%, though it was a tad lower than the 11% surge recorded in October.

Spike in six States

Six of the 22 States (including the erstwhile State of Jammu and Kashmir), for which the NSO calculates monthly inflation rates, observed a price rise of over 6% — the upper limit of the Central bank’s inflation target — in November. These included Chhatisgarh (8.4%), Bihar (7.55%), Odisha (6.8%), Uttar Pradesh (6.6%), Kerala (6.3%), and Madhya Pradesh (6.05%).

Delhi recorded the lowest inflation of 2.65%, and was the only State to record a price rise below the Reserve Bank of India’s median inflation target of 4%.

Of the other 15 States, just four saw an inflation in the range of 4% to 5% — Telangana (4.2%), Punjab and Rajasthan (4.7% each), and Maharashtra (4.81%) — while the rest reported prices rising between 5% and 6%.

Food prices trend low

November marked the onset of correction in vegetables prices, led by tomatoes and other seasonal winter vegetables, and the food price shock is now dissipating. This trend that is likely to continue over the next two to four months, QuantEco Research economists Shubhada Rao, Vivek Kumar and Yuvika Singhal said in a note.

“However, for annualised inflation to ease, we need to see a combination of four conditions transpiring – tomato prices have room to correct further; winter vegetable price correction needs to exceed seasonal trends; oils & fats inflation has a very strong persistence owing to second-order impact which needs to dissipate; and last but not the least, robust Rabi crop should bring down cereal inflation, especially for wheat,” they underlined.