ECONOMIC

RESEARCH
December 13, 2014
Namrata Narkar
+91 22 66263517
namrata.narkar@idbi.co.in

CPI Inflation Update - November 2014

The headline CPI inflation (combined) for November 2014 was noted at 4.38% (y-o-y),
softer than 5.52% (y-o-y) seen previous month. The reading came in line with in-house
expectations and also the consensus expectation. The headline combined CPI moved up in
November by 0.21% (m-o-m), as compared to a 0.14% (m-o-m) growth observed in October.
The lower reading on headline inflation was primarily a factor of decline observed in
prices of vegetables and transportation & communication but, was also aided by considerable
positive base effect.
The food index (combined) declined further by 0.1% (m-o-m) in November 2014, against
a fall of 0.3% observed previous month. The food inflation for November 2014 was thus
noted at 3.1%, a considerable fall from 5.6% seen in October 2014, aided by base effect.
The core CPI and the ex-food CPI noted an uptick of 0.2% (m-o-m) and 0.3% (m-o-m)
respectively in November 2014. The CPI inflation ex-food was placed at 5.1% for November
2014, down from 5.4% reading seen previous month. The core CPI inflation was noted at
5.6% (y-o-y) for November 2014, down from 6.0% reading seen previous month.
The final reading on headline CPI for October (combined) remained unchanged over the
provisional estimate of 5.52%. The internals, however, showed downward revision in
prices of oils & fats, egg, fish & meat, milk products, and condiments & spices.
In the rural areas for November 2014, vegetables (0.72%, m-o-m) showed the biggest
downtick followed by sugar (0.63%, m-o-m), household requisites (0.43%, m-o-m) and
transport & communication (0.36%, m-o-m). In rural areas, there were also significant
upticks observed for fruits (0.76%, m-o-m), milk & products (0.69%, m-o-m), personal
care & effect (0.60%, m-o-m) and pulses & products (0.55%, m-o-m).
In the urban areas for November 2014, vegetables (3.38%, m-o-m) showed the biggest
downtick followed by sugar (1.60%, m-o-m), fruits (1.24%, m-o-m), and transport &
communication (1.01%, m-o-m). In urban areas, there were also significant upticks observed
for pulses & products (1.44%, m-o-m), non-alcoholic beverages (1.24%, m-o-m), pan,
tobacco & intoxicants (1.04%, m-o-m) and milk & products (1.03%, m-o-m).
The latest reading on inflation, again lowest in the current series of CPI, has boosted the
markets further. This is expected to fuel further the expectations of an earlier rate cut by
the RBI. This development has also found support in the weak reading on IIP. However,
one needs to keep in mind that such a low reading on headline CPI has been majorly aided
by a very strong base, which is expected to wear off from next month onwards. Moreover,
15 out of 21 sub categories, with weight of 56%, have shown an uptick in November over
October. As a result we feel that the RBI would wait for few more readings on retail
inflation to confirm if the downtrend in inflation is sustainable. It could also possibly wait
for the budget announcement for getting clarity over the governments call on supply side
management, pending structural reforms as well as governments own finances, before
moving on rates.

Economic Research CPI Inflation Update - November 2014

Table 1 : CPI Inflation (Combined) YoY

Table 2: Statewise CPI Inflation (m-o-m) for November 2014

Nov-14

Oct-14

Sep-14

Food, Beverages & Tobacco

3.64%

5.75%

7.62%

Fuel & Light

3.27%

3.37%

3.45%

Housing

7.93%

8.12%

8.11%

Clothing , Bedding & Footwear

6.97%

7.45%

7.59%

Miscellaneous

4.28%

4.69%

4.70%

General Index

4.38%

5.52%

6.46%

State

Rural

Urban Combined

Jammu & Kashmir

0.1%

-0.9%

-0.2%

Himachal Pradesh

0.0%

-0.1%

-0.1%

Punjab

0.0%

-0.6%

-0.3%

Chandigarh

0.1%

-0.1%

-0.1%

Uttarakhand

-0.3%

-0.7%

-0.4%

Haryana

-0.2%

-0.4%

-0.3%

Delhi

-2.2%

-0.1%

-0.2%

Rajasthan

0.3%

0.0%

0.1%

Uttar Pradesh

0.1%

-0.2%

0.0%

Bihar

0.5%

-0.3%

0.4%

3.0%

Sikkim

-0.6%

0.3%

-0.4%

2.0%

Arunachal Pradesh

-0.4%

na

na

1.0%

Nagaland

-0.1%

0.1%

-0.1%

Manipur

0.1%

-0.3%

-0.1%

Mizoram

0.2%

-0.4%

-0.1%

Tripura

0.3%

-0.1%

0.2%

Meghalaya

0.5%

-0.4%

0.3%

-0.3%

-0.3%

-0.3%

0.2%

-0.4%

-0.1%

Source : IDBI Bank Ltd, Ministry of Statistics & Programme Implementation

Chart 1: Development in Rural Areas (M-o-M Inflation)

0.0%
-1.0%
-2.0%
-3.0%
A pr-12

Aug-12

Dec-12

Apr-13

A ug-13

Food, Beverages & Tobacco

Clothing , Bedding & Footwear

Dec-13

Apr-14

A ug-14

Fuel & Light

Miscellaneous

Assam
West Bengal
Jharkhand

0.5%

-0.8%

0.1%

-0.4%

0.2%

-0.3%

Chhattisgarh

0.5%

0.6%

0.5%

Madhya Pradesh

0.4%

-0.4%

0.1%

Chart 2: Development in Urban Areas (M-o-M Inflation)

Gujarat

0.2%

-0.2%

-0.1%

4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%

Daman & Diu

0.1%

0.4%

0.2%

Dadra & Nagar Haveli

0.7%

0.4%

0.5%

Maharashtra

0.7%

0.1%

0.4%

Andhra Pradesh

0.5%

0.4%

0.4%

Karnataka

0.4%

0.3%

0.3%

Goa

0.1%

-0.5%

-0.2%

Lakshadweep

0.6%

-3.0%

-1.4%

-0.1%

0.6%

0.2%

Tamil Nadu

0.7%

1.6%

1.2%

Puducherry

1.0%

0.7%

0.8%

Andaman & Nicobar Islands

1.7%

0.8%

1.2%

All India

0.2%

0.1%

0.2%

Source : IDBI Bank Ltd, Ministry of Statistics & Programme Implementation

Apr-12

Aug-12

Dec-12

Food, Beverages & Tobacco

Housing
Miscellaneous

Apr-13

Aug-13

Dec-13

Apr-14

Odisha

Aug-14

Fuel & Light

Clothing , Bedding & Footwear

Source : IDBI Bank Ltd, Ministry of Statistics & Programme Implementation

Kerala

Source : IDBI Bank Ltd, Ministry of Statistics & Programme Implementation

Economic Research CPI Inflation Update - November 2014

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