Consumer inflation eases to 5.48% in November, in line with expectations

Domestic consumer inflation stood at 5.48 per cent in November aided by moderating food prices, easing from 6.21 per cent the previous month, according to official data released on Thursday. Also known as retail inflation, consumer inflation is the rate of increase in the prices of a basket of goods and services measured by the Consumer Price Index (CPI).     According to Zee Business research, consumer inflation was estimated to come in at 5.5 per cent in November. 

"During the month of November, 2024 significant decline in inflation is observed in vegetables, pulses and products, sugar and confectionary, fruits, eggs, milk and products, spices, transport and communication and personal care and effects subgroups," according to an official statement.

Many economists believe the latest inflation reading gives room to the RBI's Monetary Policy Committee to lower the repo rate at its next scheduled review in February. The MPC has maintained a the key lending rate at 6.5 per cent since February 2023. 

"Even with no surprises on the Nov CPI print and sequential easing seen in perishable food items, food inflation stays uncomfortably high at about 9 per cent on an annualised basis and is lending pressure to the headline print to stay above 5 per cent. Sequential easing in Core CPI inflation, on the other hand, continues to depict weaker domestic demand, led by a negative output gap," said Madhavi Arora, Lead Economist at Emkay Global Financial Services.

"We maintain our FY25 forecast at 4.9 per cent with 4Q easing to an average of around 4.75 per cent. However, the inflation easing head does not guarantee a deep, linear rate cut cycle," added Arora.

The February review will be under RBI Governor Sanjay Malhotra, who took over after Shaktikanta Das demitted office upon completing his six-year tenure.

India's GDP growth slowed to a seven-quarter low in July-September, according to official data released last month.  

With inputs from agencies