Costlier Onion, Veggies Push Wholesale Inflation To Eight-Month High

Wholesale price inflation accelerated in November to an eight-month high, due to a sharp rise in onion and vegetable prices, government data showed on Thursday. Annual wholesale price inflation last month increased to 3.93 per cent from a year earlier, as compared to a 3.59 per cent rise in October. Economists in a Reuters poll had forecast wholesale inflation to rise 3.78 per cent. Wholesale prices of food articles increased to 6.06 per cent in November, as against 4.30 per cent in October, as per the data released by the Commerce Ministry.

Onion, a kitchen staple, witnessed a whopping 178.19 per cent rise in inflation last month on an annual basis. Vegetable prices too spiked 59.80 per cent on an annual basis.

Aditi Nayar, principal economist at ICRA Limited, said the spike in vegetable prices led by onions and tomatoes was the chief factor that pushed up the primary food inflation to a 16-month high of 6.1 per cent in November 2017.

Rising commodity prices resulted in an uptick in inflation for minerals, crude petroleum as well as some sub-sectors of non-food manufactured products in November 2017, she said. The index for fuel and power also showed a climb of 8.82 per cent.

Data released earlier this week showed retail or consumer inflation in November breached the medium-term target of 4 per cent of Reserve Bank of India’s (RBI). This could put pressure on it to raise policy rates in 2018.

Consumer inflation rose to a 15-month high of 4.88 per cent last month, up from 3.58 per cent in October.

Last week, the RBI held rates unchanged, despite having faced some pressure to cut rates to aid growth. The central bank’s increased concern about inflation has prompted it to hold rates since a trim in August.

The RBI has raised its inflation projection to between 4.3 per cent and 4.7 per cent for the six months ending in March 2018.