India`s November retail inflation eases as food prices moderate
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India's retail inflation eased in November as soaring vegetable prices moderated, boosting expectations of an interest rate cut by the central bank at its next policy review amid concerns around slowing growth.
Retail inflation eased in November to 5.48%, lower than 6.21% in the previous month and below a 5.53% forecast by economists in a Reuters poll.
Food inflation slowed down to 9.04% from 10.87% a month earlier. Food accounts for nearly half of the consumption basket.
Vegetable prices rose 29.33% in November from a year earlier after rising 42.18% in October.
India's growth slowed from July to September to a seven-quarter low, prompting calls for rate cuts, with India's finance and trade ministers urging lower interest rates.
Moreover, with the appointment of new central bank governor Sanjay Malhotra, economists predict sooner-than-expected rate cuts even as former governor Shaktikanta Das stressed that restoring a balance between inflation and growth remains an important task for the Reserve Bank of India (RBI).
The RBI left interest rates unchanged earlier this month, but reduced the cash reserve ratio that banks are required to hold in order to ease monetary conditions and support growth.
"The breakdown showed that falling food inflation, particularly for vegetables, was the main driver," said Harry Chambers of Capital Economics.
"Further falls in food inflation will put downward pressure on the headline rate and softer economic growth should keep a lid on core inflation."
Vegetable prices in November moderated due to a bumper summer crop harvest, aided by a favourable monsoon. A good monsoon, adequate reservoir levels and higher minimum support prices are also seen boosting winter crop sowing and production, in turn lowering food inflation in the coming months, according to the government.
The inflation rate for cereals in November was 6.88% in November compared to 6.94% a month ago, while that for pulses was 5.41% against 7.43% a month earlier.
Core inflation, which excludes volatile items such as food and energy and is seen as a better gauge of domestic demand, was between 3.64% and 3.7%, compared to 3.7% in October, according to two economists.
