Retail inflation moderates with correction in vegetable prices

Correction in vegetable inflation and a dip in foodgrain inflation to a 28-month low cooled food inflation in November. As a result, headline consumer price inflation declined to 5.5% - within the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, but still at a distance from the central bank’s 4% target.

Even so, food inflation remains high at 9% in November, driven by rigidity in vegetable inflation and elevation in edible oils inflation, warranting caution. Edible oils inflation at a 30-month high of 13.3% is being driven by global supply disruptions and increase in import duties, and since October has seen the fastest sequential climb among all food categories.

The non-food component of Consumer Price Index (CPI) inflation remained low at 3.1%, supported by the recent softening in global energy and commodity prices.