Demonetisation Impact: Retail inflation cools to 2-year low of 3.63% in November

New Delhi: Retail inflation eased to 2-year low of 3.63 percent in November this year due to lower consumer spending on various food items including vegetables since government's move to scrap old Rs 500/1000 notes.

The Consumer Price Index (CPI) based inflation was 4.20 percent in October this year.

In November last year, retail inflation was at 5.41 percent.

Food inflation was 2.11 percent last month, lower than 3.32 percent recorded in October.

Inflation in vegetables category was in the negative zone at (-)10.29 percent in November this year. However, inflation in fruits stood at 4.60 percent, slightly up from October's 4.42 percent. Cereals and products at 4.86 percent too showed a rise in inflation print during the month against 4.40 percent.

Lowering inflation will make the context favourable for a rate cut by the Reserve Bank of India (RBI) at its next monetary policy review due in Februray 2017.

The government target is four percent plus-or-minus two percentage points for the next five years.

The Reserve Bank of India unexpectedly held interest rates last week citing sticky core inflation as one of its worries.