Little pressure to raise rates as inflation continues to stall

The consumer-price index, which measures what Americans pay for everything from breakfast cereal to college tuition, was unchanged in November after rising a seasonally adjusted 0.2% in October, the Labor Department said Tuesday. The latest figure was 1.3 percent core inflation for the year ended October 31. It was the third month that the core CPI increased by that much.

The Reserve Bank mostly tracks the Consumer Price Index (CPI)-based retail inflation for its monetary policy decisions. While a crash in global commodity prices has tamped down prices in India, the central bank remains anxious about elevated household inflationary expectations.

Consumer price inflation in the country accelerated to 5.41 per cent in November, rising for a straight month, despite a still-negative whole sale price inflation, official data released today showed.

On Wednesday, data is forecasted to show growth in annual income slowed to just 2.3% over the last three months from a prior rate of 2.5%.

Prices of food also weakened 0.1% on the month, amid weakness in agricultural prices this year.

The indexes for shelter, medical care, airline fares, new vehicles, and tobacco were among the indexes that rose in November.

He added: “While the impact of lower oil prices still may be filtering down the supply chain, services inflation looks set to strengthen in response to recent hefty rises in unit labour costs”. The rate of price rise in case of vegetables was 14.08 per cent during November.

The rise in inflation took the CPI into positive territory for the first time since July, but it has now remained at or close to zero for 10 consecutive months in the longest run of flat or falling prices since records began.

“All this means the Bank of England is likely to wait longer before raising rates”, said Bretell.

Food inflation shot up to 5.20 per cent in November, as against 2.44 per cent in October.

CPIH (not a National Statistic) grew by 0.4% in the year to November 2015, up from 0.2% in October 2015.

Costs of medical care climbed 0.4 percent after a 0.8 percent advance. “Food prices as measured by the food sub-index also increased at higher pace in November”, the NBS said.