The consumer price index-based inflation rose to 5.5 per cent in November 2023 due to a surge in food prices, data by the Statistics Ministry said on Tuesday.
Inflation has been at the fastest pace in three months, and neared the Reserve Bank of India’s upper tolerance band of 6 per cent.
The retail inflation quickened as food prices climbed, giving the central bank a reason to keep interest rates higher for longer.
The number has remained within RBI’s tolerance band of 2-6 per cent. However, it has now been above the medium-term target of 4 per cent for 50 consecutive months. Food inflation for November stood at 8.7 per cent.
Vegetable inflation registered a rate of 17.7 per cent, while the inflation for fuel and light experienced a contraction of (-)0.77 per cent.
The inflation rates in rural and urban areas recorded a respective increase to 5.85 per cent and 5.26 per cent as compared to 4.62 per cent and 5.12 per cent observed in the corresponding month of the previous year.
Food inflation accelerated to 8.7 per cent from 6.61 per cent in October. Prices of vegetables such as onions and tomatoes have surged after erratic rains during the monsoon period led to shortages.
The October retail inflation was 4.87 per cent, well within the RBI’s comfort range of 4 (+/-2) per cent, and the GDP numbers were better than expected.
While announcing the decision of the Monetary Policy Committee (MPC) for the last meeting of this Calendar Year, the RBI Governor Shaktikanta Das highlighted that the CPI Inflation for the current year is projected at 5.4 per cent with Q3 at 5.6 per cent, Q4 at 5.2 perc ent.
For next year, CPI Inflation for Q1 is projected at 5.2 per cent, Q2 at 4 per cent and Q3 at 4.7 per cent. MPC decided to keep the policy rate unchanged at 6.5 per cent for the fifth monetary policy of this fiscal.