Good news: RBI says vegetable prices are falling sharply

Reserve Bank of India today said vegetable prices are coming down sharply at both wholesale as well as retail, though profiteering by traders may not lead to pass through of entire benefits at consumer level.

Wholesale inflation in vegetables segment was at 95.25 per cent in November, while the rate of price rise at retail level was 61.60 per cent.

"There are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through into retail inflation.

"Certainly sampling of Metros suggest vegetable inflation is coming down quite sharply. Our view is there might be a spike", RBI Governor Dr Raghuram Rajan said.

He was talking to reporters after unveiling the mid-quarter monetary policy review in which the RBI maintained a surprise status quo in key policy rates.

"Current inflation is too high. However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy... there is merit in waiting for more data to reduce uncertainty," De Rajan said.

While retail inflation soared to a nine-month high of 11.24 per cent in November, the index based on wholesale prices zoomed to a 14-month high of 7.52 per cent last month.

RBI said recent readings suggest that headline inflation, both retail and wholesale, have increased, mainly on account of food prices.

Dr Rajan further said that RBI's belief is "so long we reiterate our commitment towards inflation, people should not doubt our commitment to that..."

The next set of inflation data will be released in third week of January.