Food Inflation Doubles in November on Costlier Pulses, Onions

Wholesale food price inflation in November doubled to 5.20 per cent year-on-year as compared to October on account of sharp rise in prices of pulses, onions and vegetables.

Prices of pulses rose 58 per cent year-on-year, while onion prices jumped 52 per cent year-on-year during November; vegetable prices jumped 14 per cent year-on-year last month, data shows.

"Food prices rose by a considerable 2.3 per cent in month-on-month terms in November 2015, on account of factors such as supply disruptions post heavy rains in the south and seasonal trends such as a pickup in demand for non-vegetarian protein items in the winter month," said Aditi Nayar, senior economist of ICRA.

Higher food prices and anticipated higher government salaries because of the implementation of the Seventh Pay Commission are expected to stoke inflation, making it tougher for the Reserve Bank to cut interest rates in the coming months.

After easing monetary policy aggressively this year, the RBI kept the key repo rate on hold at 6.75 per cent earlier this month. Very few economists expect aggressive rate cuts in 2016.

Sluggish sowing for winter (rabi) crop is another factor that is likely to stoke food inflation in the coming months, analysts say.

According to latest data, sowing is down 9 per cent year-on-year. Summer and winter crops each contribute 50 per cent to the country's agricultural output.

November consumer price inflation data, which the RBI closely tracks for setting monetary policy, due to be released later today, is also likely to confirm rising food inflation, analysts say.

CPI inflation is tipped to have gained for the fourth consecutive month in November, rising an annual 5.4 per cent on the back of a jump in food costs, according to Reuters poll.

Meanwhile, India's wholesale prices fell for a 13th straight month in November. Wholesale Price Inflation declined an annual 1.99 per cent last month, driven down by tumbling oil prices. A Reuters poll expected a fall of 2.80 per cent.