Retail inflation eased to two-year low at 3.63% in November

Retail inflation eased to multi-year low of 3.63% in November on account of sharp drop in prices of food items, reflecting weak demand as consumers grappled with cash crunch following demonetization. This is the lowest level at least since January 2014 and the consumer inflation was seen near this level at 3.66% in August 2015.

The Consumer Price Index-based inflation stood at 4.20% in previous month October, the data released by the Ministry of Statistics and Programme Implementation showed. Retail inflation was at 5.41% in November 2015. Inflation in vegetables category slipped further in the negative territory at (-)10.29% indicating deflation, as against (-) 5.74% in October. However, inflation in fruits came in at 4.60%, slightly up from October's 4.42%.

Cereals and products at 4.86% too showed a rise in inflation print during the month against 4.40%. Protein rich meat and fish had inflation print of 5.83% in November as against 6.16% in October. Egg prices witnessed 8.55% rise as against 9.42% in the previous month. Prime Minister Narendra Modi's surprise announcement on November 8 to scrap Rs 500 and 1,000 notes, nearly 86% of the total cash in circulation, has resulted in lower consumer demand.

Overall, the Consumer Food Price Index was down at 2.11% compared with 3.32% in October. The CPI-based inflation in fuel and light segment was at 2.80% in November as against 2.81% a month ago. Rural retail inflation stood at 4.13% in November compared with 4.78% in October. For urban sector, it was recorded at 3.05% as against 3.54% in the previous month.