New Delhi: Inflation declined to 7.24 percent in November from 9.46 percent in the same month a year ago mainly on account of lower prices of some vegetables, giving a cue to RBI to consider interest rate cut next week to promote sagging growth.
     
Vegetables prices decreased by 1.19 per cent in November this year as compared to surge of 10.68 per cent in same month a year ago. Inflation, as measured by the Wholesale Price Index (WPI), came down to 7.24 per cent in November from 9.46 per cent in the same month a year ago.
     
However, prices of some food items like potato, wheat, cereals, rice, pulses, edible oil and sugar went up during the period. Inflation, as measured by the Wholesale Price Index (WPI) stood at 7.45 per cent in the previous month.

Planning Commission Deputy Chairman Montek Singh Ahluwalia termed moderation in inflation as a "very good signal". (Click Here)
     
"The time has come to recognise that inflation is clearly softening and growth is weak and I am sure that RBI knows what to do", he added.
     
On Thursday, RBI Deputy Governor K C Chakrabarty said cutting the repo rate (at which RBI lends to banks) will be possible only when inflation comes down. However, he expected inflation to come down in about 2-3 months.
    
Meanwhile, retail inflation in November moved up to 9.90 per cent, mainly on account of higher prices of sugar, vegetables, edible oil and clothing.
    
Chief Economist, HDFC Bank said inflation in November is much lower than what economists had expected and this should also encourage the RBI for more monetary expansion.
    
Chief Economist, Kotak Mahindra Bank Indranil Pan said that Inflation data is positive but for RBI to react, the retail inflation needs to come down.
     
"On December 18 policy of RBI, we are expecting only CRR cut to happen. We expect a cut by 25 basis points in the CRR. Rate change is expected only in January," he added.
    
Food inflation, as a category in the WPI, rose to 8.5 per cent during the month, from 8.32 per cent a year ago. Food articles have 14.3 per cent share in the WPI basket.
     
Though vegetables in general registered a decline, Potato and onion prices, however, shot up by 72.20 per cent and 17 per cent respectively year on year in November this year.
     
This is compared to a decline of 9.31 per cent and 35.15 per cent in the same period last year. Wheat turned expensive by 23.19 per cent in November from a decline of 4.86 per cent in the same month a year ago. Cereals became dearer by 15.85 per cent from a rise of 2.15 per cent in the same month last year.
    
Pulses and eggs, meat and fish became costlier by 19.10 per cent and 14.19 per cent in November. These food items also saw a price surge by 14.96 per cent and 11.40 per cent respectively in November last year.
    
For the fuel and power category, inflation moderated to 10.02 per cent during the month from 15.48 per cent in November 2011. However, diesel inflation increased by 14.60 per cent last month.
    
In the manufactured items category, prices of cotton textiles, man-made textile, iron and steel, paper products besides rubber and plastic products rose relatively at a lower pace compared to the same month of the previous year.
    
The rate of price rise in the manufactured products was 5.41 per cent in November, as against 8.17 per cent in the corresponding month of last year.
    
Inflation for September was revised upwards to 8.07 per cent from 7.81 per cent as per provisional estimates.

JPN/Agencies

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