India's consumer price-based inflation (CPI), a measure of the retail inflation rate, eased to an 11-month low of 5.88% in November 2022 on an annual basis, marking a fall below 6% for the first time this year, primarily on easing food prices, according to the data shared by the ministry of statistics and programme implementation (MoSPI). The final headline inflation for October 2022 is 6.77%, thus inflation fell for the second month in a row in November.

Retail inflation in rural areas declined to 6.09% in November from 6.98% in October. In urban areas, it declined to 5.68% from 6.5% in October. The November month saw inflation declining 0.11% on a sequential basis, with a 0.17% decline in urban and 0.06% in rural areas.

The food inflation for November 2022 stood at 4.67% vs 7.01% in October 2022. Vegetable inflation dipped 8.08% as compared to a rise of 7.77% last month. Fuel & light inflation rose to 10.62% vs a 9.93% rise last month. Housing, clothing & footwear and pulses inflation surged by 4.57%, 9.83% and 3.15%, respectively.

The average retail inflation has remained above the upper tolerance level -- i.e. 6% -- for all 3 consecutive quarters in January-September 2022 and October 2022 as well. The government has cited soaring commodity prices at the international level and pandemic-induced supply-demand imbalances for soaring inflation worldwide, including in India. The Russia-Ukraine conflict has also exacerbated the inflationary pressures in crude oil, gas, metals and edible oils. In India, the onset of heat waves and uneven rainfall in the later part of the monsoon season has also led to crop damage and a rise in vegetable prices.

The government data shows that headline inflation rose from 3.59% in FY18 to 5.51% in FY22. In this fiscal so far, the retail inflation rose to a new high of 7.79% in April, 7.04% in May, 7.01% in June, 6.71% in July, 7% in August, 7.41% in September, 6.77% in October and 5.88% in November. The retail inflation rates for the three quarters of 2022 stood at 6.3% in Jan-March; 7.3% in April-June; and 7% in July-September.

The Reserve Bank of India (RBI) this month kept the inflation target for the current financial year 2022-23 (FY23) unchanged at 6.7%, cautioning the battle against inflation is yet not over. It revised the inflation projection for Q3 to 6.6% and Q4 to 5.9%, respectively. The CPI inflation is projected at 5% for Q1 FY24, and 5.4% for Q2 FY24, on the assumption of a normal monsoon.

Like its global peers, India has been impacted by high inflation, prompting the RBI to announce tightening monetary measures. In the recently concluded MPC meeting on December 7, the RBI hiked the key repo rate by 35 basis points to 6.25%, increasing the repo rate by 2.25 percentage points in half a year. India's industrial output, meanwhile, shrunk by 4% in October 2022 vs 3.5% growth in September 2022, primarily due to an unfavourable base, the MoSPI data showed.

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