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Retail inflation rises to 14-month high of 5.41 per cent

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Retail inflation rose for the 4th-month in a row in November, accelerating to 14-month high of 5.41 per cent on sharp pickup in food prices, posing a challenge to further easing of monetary policy by the Reserve Bank.

The wholesale price inflation, although in negative zone for the 13th consecutive month, also moved up to (-)1.99 per cent in November as food articles including pulses and onion turned costlier. It stood at (-)3.81 per cent in October.

The consumer price-based retail inflation rose to 5.41 per cent in November, from 5 per cent in October.

The rising retail inflation will add to worries of RBI Governor Raghuram Rajan who had left interest rate unchanged earlier this month, targeting to contain retail inflation at 5 per cent in the medium term. The borrowing costs in India are among the highest across major Asian economies.

RBI is bracing itself for an expected increase in interest rate by the US Federal Reserves this week and a higher retail inflation will only add to his worries.

Besides, implementation of the 7th Pay Commission recommendations on pay hike for central government employees may further stoke price pressures. The recommendations are to take effect from January.

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