December 13, 2016

Retail Inflation: November

2016

Contact:
Madan Sabnavis
Chief Economist
madan.sabnavis@careratings.com
91-022-67543489
Manisha Sachdeva
Associate Economist
manisha.sachdeva@careratings.com
91-022-67543675
Mradul Mishra (Media Contact)
mradul.mishra@careratings.com
91-022-6754 3515

Disclaimer: This report is prepared by the Economics Division of

Credit Analysis & Research Limited [CARE Ratings]. CARE Ratings
has taken utmost care to ensure accuracy and objectivity while
developing this report based on information available in public
domain. However, neither the accuracy nor completeness of
information contained in this report is guaranteed. CARE Ratings
is not responsible for any errors or omissions in
analysis/inferences/views or for results obtained from the use of
information contained in this report and especially states that
CARE Ratings has no financial liability whatsoever to the user of
this report

Economics

The Consumer Price Index (CPI) based inflation for India eased for November2016. Retail inflation stood at 3.63%
(provisional) compared with 4.20% recorded in previous month registering marginal moderation The final retail inflation
for October16 has remain unchanged at 4.20%. CAREs estimate for the same was 3.6%.
The inflation rate has moderated on the account of decline in food inflation. CPI inflation has fallen from 3.32% in
October16 to 2.11% in November 2016. The inflation rate of food and beverages fell from 3.71% in Oct16 to 2.56% in
Nov16.
Vegetable inflation rates again remained in the negative bracket for Nov16. In fact, the inflation rate for vegetables for
the month has been registered at (-) 10.29% as against (-) 5.74% in Oct16. Price increase in pulses has moderated
substantially from 4.11%in Oct16 to 0.23% in Nov16. This may be attributed to better harvest as well as high base effect.
Inflation rate for fruits have increased marginally from 4.42% in Oct16 to 4.60% in current month while the sugar inflation
fell from 23.62% in Oct16 to 22.40% in Nov16. The same for clothing and footwear has decreased from 5.24% in previous
month to 4.98% in Nov16.
CAREs View:
We expect CPI inflation to be at 5% by March FY17.
With favorable monsoons this year and higher Kharif output entering the market, the pressures on food inflation levels
was expected to subside, thereby limiting the upside for price levels. However, the recent and unanticipated move of
demonetization and the resultant cash crunch has created distortions in the market for agricultural and farm produce. In
some areas owing to increased supplies, farmers are reported selling their produce at lower prices, while in many regions
the disruption in the supply and movement of goods consequent to the cash crunch has led to a rise in prices. While the
short run expectation is stability in price movement due to the effects of good harvest, high base and demonetization
impact on some farm products, the rate is likely to move towards the 5% mark by March 2017.

Economics I

Retail Inflation: November 2016

Inflation rates for various groups (%)

Group
Cereals and products
Meat and fish
Egg
Milk and products
Fruits
Vegetables
Pulses and products
Sugar and Confectionery
Food and beverages

Inflation
4.86
5.83
8.55
4.57
4.6
-10.29
0.23
22.4
2.56

Pan, tobacco and intoxicants

Clothing
Footwear
Clothing and footwear
Housing
Fuel and light
Household goods and services
Transport and communication

6.29
5.1
3.86
4.98
5.04
2.8
4.21
3.77

Recreation and amusement

4.03

Personal care and effects

Miscellaneous
CPI: General

7.73
4.83
3.63

CPI: Food

2.11