The fall in food and transport prices cooled in the year to November 2015, compared to October, causing the inflation rate to edge up to 0.1%. Excluding the volatile food and energy categories, so-called core prices rose 0.2%, the same pace of growth as in October and September.
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The Reserve Bank of India, which is now only guided by the CPI in its monetary policy decisions, should take notice of this food inflation reading before resorting to further policy rate cuts next year, said economists.
Year-over-year, core prices were up 2.0 percent, their largest increase since May 2014.
The report was released just hours before Fed officials were due to gather for a two-day meeting.
Paul Ashworth, chief US economist at Capital Economics, said he expects rising inflation will prompt the Fed to raise its key interest rate to near 2 percent by this time next year.
Shelter, medical care, airline fares, new vehicles, and tobacco were among the indexes that rose in November. The index for food at home declined 0.3 percent, while the index for food away from home rose 0.2 percent.
The rate of price rise in potato was (-)53.72 per cent, while in egg, meat and fish it was (-)2.24 per cent. The core inflation in the economy was up 2 percent over the last 12 months ending in November. But even core inflation has been weak, in part because of a strong dollar that has lowered import costs for consumers. But clothing prices were the biggest drag on inflation after they recorded an unprecedented monthly fall between October and November, usually a period of higher prices as consumers shop before Christmas.
The wholesale price index remained in negative territory for the thirteenth month in a row. Energy prices fell 14.7%, but that was the smallest decline since December as comparisons get tougher. The rent index was up 3.6% in the 12 months through November, reflecting rising demand for rental accommodation as more Americans shun homeownership.
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“Earlier this year the Bank forecast that inflation would pick up as the effect of the drop in oil prices fell out of the year-on-year calculations”.
