How worrying is record-high wholesale price inflation?

 An RBI survey showed that households can expect inflation to rise further in the near and medium term.

Wholesale prices also surged to a decade high in November. Find out if it is a cause of concern
Pushed by higher food and fuel prices as well as by the impact of rupee depreciation, India’s wholesale price inflation, which acts as a proxy for producers’ prices, accelerated to a record high this November.

The wholesale price index-based inflation rose to 14.23% against 12.54% in October. This is the highest WPI rate in the 2011-12 series and has remained in double digits for the eighth consecutive month.

Fuel and power inflation reached 39.81% while manufactured product prices rose 11.92%. The number has raised fears that this may translate into elevated retail inflation in the short term. 

The retail or consumer price-based inflation, the main indicator monitored by the Reserve Bank of India’s monetary policy committee, rose 4.91% in November. 

The central bank expects retail inflation to be at 5.1% for the October-December period, and its communication shows it is comfortable with that number. 

The central bank left the interest rate unchanged at a record low of 4% with Governor Shaktikanta Das stressing that RBI’s overarching priority at this stage is a revival of growth.

India’s economy expanded 8.4% in the second quarter, the fastest pace among major economies. 

Higher retail inflation may scuttle its effort to boost growth by keeping interest rates low.