India’s CPI Inflation Jumped to 5.54 Percent in November 2019

India's retail inflation grew 5.54 percent YoY in November compared to 4.62 percent in October 2019, led by vegetables and onions price. The food price inflation that constitutes around half of the inflation basket, grew 10 percent in November compared to 7.89 percent in previous month. Within food and beverages category, vegetable prices rose 36 percent in November compared to 26.1 percent and pulses rose to 13.94 percent in November compared to 11.72 percent in October. Seasonal food supply constraint is likely to put upward pressure on inflation in coming months.

Core Inflation that excludes volatile prices of items such as food and energy remained modest at around 3.5 percent in November 2019. The stagnant core inflation reflects the subdued demand in the economy. However, increase in telecom tariffs could push core inflation in coming months.

November inflation print, breaches RBI’s medium-term target of 4 percent for the second consecutive month. The surging inflation coupled with low GDP growth and declining industrial production possess policy challenge to RBI. However, MPC has given weightage to inflationary concerns over economic growth in its last meeting.