Low inflation is a positive signal for economic growth, say experts

New Delhi, Dec 12 India's retail inflation rose marginally in November but remained well below the Reserve Bank of India's (RBI) target, offering continued support to the country's growth outlook, market experts said on Friday.

Retail inflation stood at 0.71 per cent in November, up from 0.25 per cent in October, Vineet Nahata, Director at Power Gilt Treasuries, told IANS.

Despite the month-on-month uptick, he said the headline number stays more than 3 percentage points below the RBI's 4 per cent target, reflecting a favourable macroeconomic environment.

"The low inflation rate is extremely positive for the economy and creates a supportive backdrop for sustained growth," Nahata told IANS.

Data released by the Ministry of Statistics and Programme Implementation showed a clear divergence between urban and rural areas.

Urban retail inflation came in at 1.40 per cent, while the rural inflation rate was significantly lower at 0.10 per cent.

Food prices continued to exert downward pressure on overall inflation.

Food inflation was recorded at –3.91 per cent in November, with rural areas witnessing a –4.05 per cent decline and urban areas –3.60 per cent.

The disaggregated data showed that prices of key items such as vegetables (–22.20 per cent), pulses (–15.86 per cent) and spices (–2.89 per cent) saw sharp declines compared to the same month last year.

However, certain categories registered increases: cereals (0.10 per cent), meat and fish (2.50 per cent), eggs (3.77 per cent), milk (2.45 per cent), oils and fats (7.87 per cent), fruits (6.87 per cent), sugar (4.02 per cent) and non-alcoholic beverages (2.92 per cent).

Nahata also commented on the ongoing discussions surrounding the India-US trade agreement, noting that further clarity is expected soon.

His remarks come a day after India’s Chief Economic Adviser V. Anantha Nageswaran indicated that the deal is likely to be finalised by March, with tariff details to be announced thereafter.

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