The annual rate of inflation based on monthly wholesale price index (WPI) for the month of November is up 4.78% (provisional) as against 1.34% in October 2009 and 8.48% in November 2008. In the fiscal year, inflation build up so far was 7.54% compared to 3.86% in the corresponding period of last year.
Inflation internals (MoM)
- Primary articles up 2.6% at 280.6
- Food items up 3.2% at 287.1
- Non-food items up 1.6% at 240.1
- Fuel group at 344.9
- Manufactured products up 1.2% at 211.1
Manufacturing inflation has come in as a surprise leading experts to believe that RBI action is almost imminent now.
Saugato Bhattacharya of Axis Bank believes this is a matter of concern, and quite disturbing, "We didn't expect manufacturing inflation to go up this quickly in November," he said in an interview on CNBC-TV18.
"The RBI would be forced to take this number seriously," he said adding that a degree of tightening is almost imminent now.
According to him, the priority would be to tighten liquidity. He expects the RBI to start doing this through a cash reserve ratio (CRR) hike first. Thereafter, he expects that interest rates would be hiked.
He expects the year end inflation to be around 7.5-8% (around March-April). That maybe the peak and inflation may not rise after that, he said.
