New Delhi: Inflation based on wholesale price index (WPI) jumped to 14 months high of 7.52 per cent in November as prices of vegetables soared. This is likely to force RBI to hike interest rates in December in an attempt to cool off prices.
The price of onions jumped by 190 per cent, vegetables by 95.25 per cent, potato by 26.71 per cent, egg, meat and fish by 15 per cent in November. Vegetables contributed nearly 25.2 per cent to the inflation in November, according to India Ratings and Research.
However, there are indications that the price of vegetables and onions are likely to dip in December as new fresh supplies hit the markets.
Inflation was at seven per cent in October and 7.24 per cent in November last year. Consumer price inflation for November had also soared to 11.2 per cent from 10.2 per cent in October.
“As a result of rising price pressures, RBI is likely to raise the repo rate by 25 basis points to 8.0 per cent on December 18 in its monetary policy eview, despite a still-shrinking industrial sector (the index of industrial production fell by 1.8 per cent in October),” said rating agency Crisil.
It said that momentum indicators suggest that while inflation in primary articles is likely to moderate in the coming months, inflation in manufactured products could accelerate further.
“With a weak rupee and rising fuel prices, margins of producers are under stress. The extent of rising input costs being passed on to consumers is likely to rise further, especially if household consumption begins to improve,” it said.
Manufacturing inflation though still low, inched up further to 2.64 per cent in November from 2.50 per cent in October. However, industry asked RBI to consider the slow down in industry before taking any decision on interest rate hike.
“We hope RBI will take due cognisance of the fact that growth is still feeble and needs support. IIP data released last week indicated negative growth in October 2013,” said Ficci president Naina Lal Kidwai.
