India's wholesale price index increased by 3.93 percent on the year in November, up from 3.59 percent in November and the highest level since March. The index advanced 0.69 percent on the month in November after increasing by 1.05 percent in October. Consumer price index data published earlier in the week also showed an increase in headline inflation from 3.58 percent in October to 4.88 percent in November, the highest since August 2016 and above the mid-point of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent.
As with CPI inflation, the increase in WPI inflation in November largely reflects stronger vegetable prices after heavy rainfall in parts of India during the month resulted in significant damage to key crops. Food prices, which account for around 15 percent of the index, increased by 6.06 percent on the year in November, up from 4.30 percent in October, with year-on-year growth in vegetable prices accelerating from 36.61 percent to 59.80 percent. Price pressures elsewhere were more subdued, with the year-on-year increase in fuel and power prices (around 13 percent of the index) falling from 10.52 percent in October to 8.82 percent in November, and inflation for manufactured products (around 64 percent of the total index) down slightly from 2.62 percent to 2.61 percent.
The increase in headline WPI and CPI inflation in November is in line with officials' view that price pressures are likely to build in the near-term, although officials also note that inflation outcomes will continue to depend heavily on the outlook for agricultural output. At its most recent policy review, held last month, the RBI kept policy rates on hold but revised slightly higher its forecasts for headline CPI inflation in the current fiscal year.