November inflation surprisingly drops to 7.24%

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November inflation surprisingly drops to 7.24%
Inflation for November surprisingly dropped to 7.24% against broad consensus estimates of around 7.6%, raising hopes for an RBI rate cut on December 18.

"Monthly WPI, stood at 7.24% (provisional) for the month of November, 2012 (over November, 2011) as compared to 7.45% (provisional) for the previous month and 9.46% during the corresponding month of the previous year. Build up inflation in the financial year so far was 4.84% compared to a build up of 5.28% in the corresponding period of the previous year," a ministry release has stated.

Primary articles index which commands a weightage of more than 20%, rose by 0.3 percent to 220.8 (provisional) from 220.2 (provisional) for the previous month.

The groups and items for which the index showed variations during the month are as follows:-

The index for ‘Food Articles' group rose by 0.3 percent to 213.2 (Provisional) from 212.5 (Provisional) for the previous month due to higher prices of ragi (10%), bajra (5%), barley (3%), wheat and fish-marine (2% each) and fish-inland, mutton, gram, maize and fruits & vegetables (1% each). However, the prices of poultry chicken (8%), coffee and jowar (4% each), urad (3%), tea (2%) and arhar (1%) declined.

The sharp decline in inflation may now raises hopes for a repo rate cut by the RBI when it meets to review its monetary policy on Dec 18.

Stock markets reacted favourably to a drop in the inflation rate with banking stocks gaining on the hopes of rate cuts or a CRR cut.

Read more about: inflation, wpi
Story first published: Friday, December 14, 2012, 19:24 [IST]
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