Tuesday, 09 Jun, 2026
By: Damini Mehta
Headline inflation in the month of November 2023 has risen to 5.55% up from 4.87% in October and 5.02% in September of this year. Image Credits: IANS
The recent spike in retail inflation is driven largely by food inflation which is measured by the consumer food price index accounting for nearly half of the overall consumer price basket.
On 8th December 2023, at its most recent meeting, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep key interest rates unchanged at 6.5%. Along with this, the body raised India’s growth projections for 2023-24 from 6.5% to 7%. It retained its average inflation forecast at 5.4%, all the while warning that inflation could spike through November and December largely owing to food inflation. The recently released Consumer Price Index (CPI) or headline inflation numbers by the Ministry of Statistics and Programme implementation back the RBI’s stance. Headline inflation in the month of November 2023 has risen to 5.55% up from 4.87% in October and 5.02% in September of this year. Although the figure is higher than RBI’s target of 4%, it remains within its tolerance range of 2-6% for the third consecutive month.
The recent spike in retail inflation is driven largely by food inflation which is measured by the consumer food price index accounting for nearly half of the overall consumer price basket. Food inflation in the month of November 2023 rose to 8.70% from 6.61% in October and 6.62% in September. The winter season sowing is already lower than last year and will push the food inflation numbers further up. Given the retail inflation in November rose at the fastest pace in three months, it also justifies the MPC’s cautious stance on rate hikes reflected in its decision to move towards a withdrawal of accommodation to ensure that inflation aligns to the target without harming growth.
Source: MOSPI
A similar spike in retail inflation was recorded in July 2023, when India’s CPI rose to a 15-month high of 7.4%. Just as now, in July as well the spike in price rise at the end of the consumers was driven by an increase in food prices due to seasonal fluctuations and erratic rains. This time, inflation in vegetables and pulses stood at a double digit high of 17.70% and 20.23%, respectively, a considerable jump from 2.70% and 18.79% during October. Inflation in the ‘Food and beverage’ jumped from 6.24% in October to 8.02% in November.
Rising trend in retail inflation and more specifically food inflation is a cause of worry owing to its sticky and seasonal nature and the direct impact it has on the consumer’s pockets. Expenditure on food and everyday consumables forms the largest part of an average Indian consumer’s budget. Any spike in prices has a direct impact on their ability to run the household especially when it comes to the section of the population that still lives on hand to mouth existence below the poverty line. Moreover, an upward trend in CPI inflation also puts a dent on the household’s ability to make purchases and spending beyond the basic requirements and in the medium and long run affects growth momentum.
According to the RBI’s baseline forecast, average headline CPI inflation will be at 5.6% and 5.2% for the third quarter and fourth quarter of 2023-24 respectively. A change in the MPC’s positive coupled with measures to keep food and vegetable items in check is needed to help neutralize retail inflation to a level that doesn’t harm the consumer.
