Inflation based on the Wholesale Price Index dropped for the third consecutive month in November, easing to 3.15% last month from 3.39% in October. The contraction is a result of a decline in the demand for perishables as well as people’s purchasing power, owing to the cash crunch in the country since the government demonetised Rs 500 and Rs 1,000 notes.
Food inflation, too, declined in November to 1.54% from 4.34% in October as the prices of vegetables nosedived since the currency ban was announced on November 8, according to data from the Ministry of Commerce and Industry.
Inflation of fuel and power as well as manufactured products, however, both climbed in November – from 6.18% and 2.67% in October to 7.07% and 3.2% in November. The inflation of manufactured items was caused by a rapid rise in the prices of basic metal products, chemical products and food products derived from raw materials.
The Wholesale Price Index measures the cost of bulk goods traded between organisations. The index has a major impact on fiscal and monetary policies in India.
The Consumer Price Index, which measures retail inflation in India, dropped to a two-year low of 3.63% in November from 4.20% in October. This is the fourth consecutive month that the CPI has declined.