In a double whammy for the policy makers, the provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) for November 2013 on point to point basis (November 2013 over November 2012) accelerated to nine months high level at 11.24%, much higher than expectation of over 10% figure and also higher as compared to 10.17% for the previous month of October 2013. The corresponding provisional inflation rates for rural and urban areas for November 2013 stood at 11.74% and 10.53% respectively, compared to 10.19% and 10.20% respectively in October.
The surge in retail Inflation was mainly on account of spike up in food inflation, which accelerated to 14.72% against 12.56% in October, as vegetable prices rose by 61.6% in November from a year earlier, compared with a 45.67% increase in the previous month. Meanwhile, Fuel and Light; Clothing, bedding and foot-ware segment registered growth of 7.00% and 8.94% over a period ago.
This data came as a rude shock for the economy grappling to deal with its soaring inflation amidst slower industrial growth, which contracted by 1.8% in October, as this strengthens the case of Reserve Bank of India (RBI) hiking its base rate by another 25 basis points in its upcoming third monetary policy review on December 18. Meanwhile, Reserve Bank of India’s governor Raghuram Rajan, last month underscored high inflation warranted an appropriate policy response after raising the key repo rate for the second time in as many months in October to 7.75%.
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