Inflation Decreased in India This November

In India, the core inflation rate declined to 5.48% in November. This rate fell below the 14-month high of 6.21% recorded in October and was also below economists' expectations of 5.53%. The Reserve Bank of India (RBI) held the interest rate steady at 6.5% during last week's monetary policy meeting, a decision that came after a slowdown in economic growth. GDP growth for the country in the second financial quarter that ended in September was recorded at 5.4%. This rate not only fell short of economists' expectations but also approached a two-year low.

Although the RBI does not publish monthly inflation projections, it anticipates that the core inflation rate will reach 5.7% for the third financial quarter ending in December. The central bank's full-year inflation forecast for the financial year ending in March 2025 is set at 4.8%.

Looking ahead, the RBI expects a reduction in food inflation in the fourth financial quarter due to anticipated seasonal declines in vegetable prices and the arrival of the autumn harvest. Favorable soil moisture and dam levels are also being considered supportive factors for the production of winter crops.

Agriculture significantly impacts India's GDP, and food prices tracked by the consumer food price index remain a critical factor in the country's inflation measurements. The RBI has warned that adverse weather conditions and rising international agricultural commodity prices could elevate food inflation. In a statement made on December 6, the central bank indicated that businesses are expected to continue facing high input cost pressures and foresee an increase in selling prices starting from the fourth financial quarter.