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Retail inflation increases to 4.91% in November 2021

Retail inflation increases to 4.91% in November 2021

In November, India’s benchmark inflation rate, calculated by the Consumer Price Index (CPI), topped 4.91% year-on-year on the back of higher vegetable prices, according to data released by the Ministry of Statistics and Programme Implementation on Monday.

In November, India’s retail inflation recorded a three-month high of 4.91 percent, according to data released today. For the fifth consecutive month, retail inflation has been within the target range set by the RBI of 2-6 percent. As of November 1, 39 economists polled by Reuters predicted consumer price inflation of 5.10 percent. This is higher than 4.48 percent in October.

Rural Vs Urban:

According to the CFPI and CPI, both inflation rates were higher in urban areas of the country than they were in rural areas.

While retail inflation in urban areas climbed by 5.54 percent and food inflation by 1.09 percent, food inflation climbed by 3.33 percent in urban areas and 4.29 percent in rural areas, respectively.

Several Factors for Inflation:

inflation

The primary factors driving inflation in November were fuel prices and transportation costs. Consequently, various input items increased in price.  As well as ‘transport and communications’, ‘fuel and light’ also showed declines in November 2021, but remained in double digits.

Several commodities, including health care, fuel, and light, as well as transportation, have become structurally inflating. Since food prices have corrected except for tomatoes, the inflation trajectory has somewhat improved, especially when you take into account the unfavorable base effects. Crude oil prices have dropped significantly in the past year. Raw material prices are still high, transportation costs are high, and global logistics are clogged.  

Effects of Retail Inflation:

The Ministry of Statistics and Programme Implementation published retail inflation data for last month at 5.03 %. Retail inflation has been at an All-Time High for three consecutive months. Even though retail inflation is still below the RBI’s target, experts are worried that it will rise further due to the high energy prices, which are already cascading to other commodities.

Inflation Rate in Previous year’s:

Retail inflation based on the Consumer Price Index (CPI) was 5.59% in July and 6.69% in August 2020. As reported by the National Statistical Office (NSO), food-basket inflation was 3.11% in August compared with 3.96% in July.

Food inflation, particularly in cereals, sugar, and vegetables, and core inflation fell below 6% after being upward for the last few months. Fuel inflation remained near 13% in August despite expectations for an upward trend.

Inflation Rate 2020 Vs 2021:

Government data show a marginal rise in retail inflation due to higher food prices in October. The CPI-based inflation rate in September 2021 was 4.35 percent, and in October 2020 it was 7.61 percent.

Retail inflation calculated using the Consumer Price Index (CPI) in July was 5.59% and 6.69% in August 2020. In August, the National Statistical Office (NSO) reported an increase in inflation in the food basket of 3.11 percent compared with 3.96 percent in July. Among the main causes of inflation are: 

  1. Cost-Push Factors
  2. Higher Wages
  3. A rise in Production costs
  4. Demand-Pull Inflation
  5. Cost Pull Inflation

Conclusion:

An increase in the overall level of prices of goods and services in an economy over time is inflation. Real inflation begins after full employment when aggregate demand exceeds aggregate supply.

Inflation must remain moderate. A 3% to 4% rise in inflation in developing countries may be acceptable, but in developed countries, it must only be 1% to 2%.

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