Due to a slower rate of increase in food costs, wholesale inflation in India decreased from 2.36 percent in October to 1.89 percent in November on an annual basis.

According to the Ministry of Commerce & Industry, the main cause of the positive inflation rate in November was the rise in the costs of textiles, machinery & equipment, food items, and other manufacturing.

Vegetable prices increased 28.57% year over year in November, a significant decrease from a 63% increase in October, while food inflation decreased to 8.29 percent in November from 11.59 percent in October.

A Reuters poll predicted that wholesale inflation, as determined by the Wholesale Price Index, will slow to 2.20 percent.

Inflation for manufactured goods increased by 2% last month compared to 1.5% in October.

Inflation of primary items decreased from 8.10 percent in October to 5.49 percent in November. Compared to a contraction of 5.79 percent in October, fuel and power were at (-) 5.83 percent.

From 39.25% in October to 2.85% in November, onion inflation fell sharply. On the other hand, potato inflation increased from 78.73% in October to 82.79% in November.

In the meantime, grain prices increased 7.81% last year as opposed to 7.9% one month prior.

The price of a sample basket of wholesale items is measured by the WPI. The wholesale pricing index in India is separated into three categories: 

Fuel and Power (13.2 percent), Primary Articles (22.6 percent), and Manufactured Products (64.2 percent) make up the remaining weight.

After exceeding the RBI's 6 percent upper tolerance band in October, retail inflation in India decreased to 5.48 percent in November as the introduction of fresh food helped to curb skyrocketing vegetable prices.

Thanks to a favorable monsoon and a record-breaking summer agricultural production, prices decreased. Inflation for food, which accounts for about half of the Consumer Price Index (CPI) basket, decreased from 10.87 percent in October to 9.04 percent in November.

According to the government, a healthy monsoon, sufficient reservoir levels, and increased minimum support prices are also anticipated to increase winter crop output and sowing, which will reduce food inflation in the upcoming months.

Food costs have a big impact on India's inflation index since 1.4 billion people spend the majority of their money on food. A higher food inflation figure, according to experts, could prevent a sharp drop in overall inflation.

RBI's Stance on Inflation

In view of worries over food inflation, the RBI's Monetary Policy Committee (MPC) this week raised its inflation predictions for the same time from 4.5% to 4.8% while downgrading its GDP forecast for this fiscal year from 7.2% to 6.6%.

The MPC maintained its neutral position, indicating that rate decreases may be possible if inflationary pressures subside in the upcoming months.

In his remarks at the MPC meeting, former RBI Governor Shaktikanta Das predicted that food inflation will continue to rise through the third quarter of FY25 before beginning to decline in the fourth quarter. "High inflation reduces the disposable income in the hands of consumers," he stated.

Das pointed out that there are upside risks to inflation due to rising weather occurrences, market volatility, and geopolitical developments.