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Inflation accelerates 14-month high of 7.5%
Posted on: 17/Dec/2013 2:10:16 PM
Wholesale price inflation skyrocketed to a 14-month high in November, cementing the case for a third successive rate hike by the Reserve Bank of India Governor Raghuram Rajan on Wednesday despite the risk that it could undermine the chances of an economic revival.
Inflation based on the Wholesale Price Index (WPI) accelerated to 7.52% in November, the fastest since September 2012, from 7% in October, according to data released by the ministry of commerce & industry on Monday. September WPI was revised upward to 7.05% from 6.46%.
The yield on India`s benchmark 10-year bonds fell marginally and the BSE Sensex was little changed with the market having factored in a 25-basis point increase in the repo rate.
The latest data follow bad news on consumer price inflation, which surged to a record 11.24%, the government said on Thursday. The highest reading on both indices is largely because of elevated vegetable prices that have not cooled despite the good monsoon and the arrival of winter crops.
Core inflation or inflation related to non-food manufactured products that are considered a measure of demand pressure in the economy, remained low and steady at 2.6%, but a rate hike is inevitable as high food inflation could easily spill over to other categories or become more generalized.
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