India's November wholesale inflation slows to 1.89% y/y

AI Sentiment: Bullish
Reason: India's wholesale prices rose significantly in November, driven by increased prices of food articles and manufactured items. However, the Reserve Bank of India expects inflation to remain within its target range, pledging to support economic recovery and manage inflation.

In November, India's wholesale prices saw a significant rise, increasing 1.89% year-on-year. This is according to data from the Ministry of Commerce and Industry. This increase in wholesale prices is the highest it's been in eight months. The increase was mainly driven by a rise in prices of food articles and manufactured items.

The wholesale price index (WPI), which measures the change in the price of goods sold by wholesalers, was up 0.16% from the previous month. This is significant because a rising WPI could mean higher retail prices for consumers, which could potentially cause inflation. However, the Reserve Bank of India (RBI) has said that it expects inflation to remain within its target range of 2-6%.

The data also showed that prices of food articles rose by 3.94%, while prices of manufactured items went up by 2.97%. This is considerably higher than the 0.42% rise in food article prices and the 1.61% increase in manufactured item prices that were recorded in October. The rise in food article prices can be attributed to the ongoing supply chain disruptions caused by the pandemic, while the rise in manufactured item prices is likely due to increased input costs.

Meanwhile, the fuel and power group, which has a 13.15% weightage in the WPI, saw a decrease of 9.87%. This is in contrast to the 10.95% decrease that was seen in October. The lower decrease in November suggests that prices in this group are starting to stabilize.

In response to the rising wholesale prices, the RBI has pledged to continue with its accommodative monetary policy stance, which aims to support economic recovery and manage inflation. The central bank has also said that it will continue to monitor the situation closely and will take necessary measures to ensure price stability and support growth.