India's wholesale inflation drops to a 21-month low of 5.85%

According to the government data, India's wholesale price inflation fell sharply to 21-month low of 5.85 per cent in November.

New Delhi, Dec 14: India's wholesale price inflation fell sharply to 21-month low of 5.85 per cent in November, a statement from the government said on Wednesday.

For the second straight month, the wholesale inflation remained below the double-digit mark. Last month, it was at 8.39 per cent, official data showed on Wednesday. The data claims that the drop was mainly due to a fall in prices of food articles, basic metals, textiles, chemicals and chemical products, and paper and paper products as compared to the corresponding month of the previous year. It means the retail inflation in India is now at an 11-month low and it declined below 6 per cent, which is in RBI's comfort zone, according to a report.

Since May, the RBI has hiked key policy rate by 225 basis points to cool off domestic retail inflation that has stayed above the RBI's upper tolerance limit for over three quarters now.

Under the flexible inflation targeting framework introduced in 2016, the RBI is deemed to have failed in managing price rises if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row. An out-of-turn meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India was held in early November to discuss and draft the report to be sent to the central government for having failed in maintaining the inflation mandate, according to a PTI report.

The government releases index numbers of wholesale price in India on monthly basis with a time lag of two weeks of the reference month, and the index numbers is compiled with data received from institutional sources and selected manufacturing units across the country.

With inputs from agencies