India's retail inflation reached 3-month high of 5.55% in November
India's retail inflation jumped to 5.55% in November, a significant increase from October's four-month low of 4.8%, as reported by the Ministry of Statistics & Programme Implementation. This spike is mainly due to a sharp rise in food prices, with food inflation hitting 8.7% for the month. However, the inflation rate still falls within the Reserve Bank of India's (RBI) acceptable range of 2-6%.
Inflation within RBI's comfort zone, but challenges loom
Although the inflation rate is within RBI's comfort zone, the central bank could face challenges in the future. In its latest policy review, the RBI's Monetary Policy Committee (MPC) chose to keep key rates unchanged but cautioned that it would remain "highly alert" to take appropriate policy actions if necessary. RBI Governor Shaktikanta Das stated, "The MPC decided to keep the policy repo rate unchanged at 6.50%, but remain highly alert and prepared to undertake appropriate policy actions, as warranted."
Industrial production surges
In October 2023, India's Index of Industrial Production (IIP) reached a 16-month high, surging by 11.7% compared to a 4.1% contraction in the same period last year. This is an improvement from September's 4.5% expansion. Upasana Bhardwaj, chief economist at Kotak Mahindra Bank, explained that November's CPI inflation was "solely led by food inflation." She added, "We continue to monitor the key food items as production remains a worry amidst weak sowing, lower reservoir levels and continued erratic weather conditions."
