India's Consumer Price Index (CPI) Hits 3-Month High of 5.55%, Driven by Food Prices

India's Consumer Price Index (CPI)-based inflation rose to a three-month high of 5.55% in November, driven by a spike in prices of onion and a broad-based rise in food inflation. The Reserve Bank of India (RBI) had anticipated an increase in prices of key vegetables, which may push CPI inflation higher in the near-term. The government has taken steps to boost the supply of food items, including wheat, sugar, and onion.

Key Takeaways:

• CPI inflation rose to a three-month high of 5.55% in November, driven by a spike in prices of onion and a broad-based rise in food inflation.
• Food inflation shot up to 8.70% in November from 6.61% in October, with inflation in onions reaching a 38-month high of 86.46%.
• Core inflation eased to a 44-month low of 4.1% in November, providing some comfort to the RBI.
• The government has taken steps to boost the supply of food items, including wheat, sugar, and onion.
• The RBI had anticipated an increase in prices of key vegetables, which may push CPI inflation higher in the near-term.
• CPI rural inflation was at 5.85% in November, while CPI urban inflation was 5.26%.
• Food inflation is expected to moderate in December, partly due to the ban on onion exports and the expected decline in onion prices.
• The year-on-year growth rates of mining, manufacturing, and electricity stood at 13.1%, 10.4%, and 20.4%, respectively, in October.
• The Index of Industrial Production (IIP) rose to a 16-month high of 11.7% in October from 6.2% in September.

Statistics:

• CPI inflation: 5.55% (November)
• Food inflation: 8.70% (November)
• Core inflation: 4.1% (November)
• IIP growth: 11.7% (October)
• Year-on-year growth rates:

+ Mining: 13.1% (October)

+ Manufacturing: 10.4% (October)

+ Electricity: 20.4% (October)

Sources:

• National Statistical Office (NSO)
• Reserve Bank of India (RBI)
• IE Online Media Services Pvt. Ltd.
• Contify.com
• ICRA
• India Ratings and Research