NEW DELHI: India’s retail price inflation in November jumped to a 40-month high on higher food prices, reducing the likelihood of the central bank cutting interest rates in the next policy meeting in February.
Food inflation rose sharply as unusually heavy rains at the end of the monsoon season hit crop yields and caused a spurt in prices of vegetables such as onions.
This is the second month in a row when the retail inflation has remained above the central bank’s medium-term target of 4pc.
Annual retail inflation increased to 5.54pc last month, faster than the 4.62pc rate in October and ahead of 5.26pc forecast in a Reuters poll of analysts.
Increasing inflation and the growth rate slipping to a more than six-year low of 4.5pc in the July-September period could make policymakers and the Reserve Bank of India walk a tight rope in the coming months.
Already concerns on the inflation front prevented the Reserve Bank of India from cutting its key lending rate for the sixth straight time earlier this month, despite slashing its growth rate forecast for 2019-20 to 5pc, which would be the lowest since the 2008 financial crisis.