Retail inflation rate surged to a 14-month high of 6.21 per cent in October with a sharp rise in prices of food items, especially fruits, vegetables, meat and fish, and oils and fats, data released by the National Statistical Office (NSO) on Tuesday showed. Food inflation, based on Combined Food Price Index (CFPI) shot up to a double-digit level of 10.87 per cent in October — a 15-month high — from 9.24 per cent in September and 6.61 per cent in the year-ago period.
Food inflation has risen to double digits after a gap of 14 months for the first time since July 2023, the NSO statement showed, which was released at 4 pm for the first time after the advancement of the data releases from 5:30 pm. With the October print, the headline retail inflation rate, based on Consumer Price Index (Combined), has again breached the 4 per cent mark in the 4+/- 2 per cent band of RBI’s medium-term inflation target for the second consecutive month. With this surge in inflation, as was also flagged by the Reserve Bank of India Governor Shaktikanta Das last week, hopes of an immediate rate cut by the central bank in its upcoming monetary policy meeting in December have been dashed.
Food and beverages, which accounts for 45.86 per cent of the total weight of Consumer Price Index (Combined), registered an inflation rate of 9.69 per cent in October as against 8.36 per cent in September. Inflation rate for perishables such as vegetables increased to 42.18 per cent in October from 35.99 per cent in September, while that for fruits rose to 8.43 per cent from 7.65 per cent.
Inflation rates also inched higher for cereals to 6.94 per cent in October from 6.84 per cent in September and for meat and fish to 3.17 per cent from 2.66 per cent. There was a sharp increase in the inflation rate for oils and fats to 9.51 per cent in October from 2.47 per cent in September, indicating the rise in global edible oil prices and the impact of imported inflation. Inflation rate for housing also increased marginally to 2.81 per cent in October from 2.78 per cent in September.
“High food inflation led by strong momentum in prices of vegetable and edible oil remains a cause of concern. The surge in vegetable prices, particularly tomatoes and onions, can be attributed to unseasonal rains and extended monsoons in certain parts of the country. The rise in global edible oil prices and the recent hike in the basic customs duty of various edible oils have resulted in higher inflation in the basket, given their import dependence. It is crucial to manage food inflation, as it directly impacts household inflation expectations. This situation also underscores the need for the government to implement additional supply-side measures to stabilise food prices,” Rajani Sinha, Chief Economist, CareEdge Ratings said.
Services inflation, as captured by the miscellaneous category showed an increase to 4.32 per cent in October from 4.05 per cent in September, with the personal care and effects segment registering an inflation rate of 10.99 per cent in October as against 9 per cent in the previous month.
Region-wise split for inflation data showed that rural inflation rose to 6.68 per cent in October from 5.87 per cent in September, while urban inflation increased to 5.62 per cent from 5.05 per cent. On the food inflation front, rural areas recorded a food inflation rate of 10.69 per cent in October as against 9.08 per cent in September, while urban areas recorded a higher food inflation rate of 11.09 per cent in October compared with 9.56 per cent in the previous month.
Last week, RBI Governor Das had said that the CPI-linked inflation rate is likely to escalate further in October. The Governor had also stated that the change in monetary policy stance in the October policy to ‘neutral’ from ‘withdrawal of accommodation’ should not be interpreted as a cut in the repo rate in the next policy, dampening hopes of the much-awaited reduction in the key policy rate. “We have to be very cautious in our future course of action. A change in stance doesn’t mean that the next step (by the RBI) is a rate cut in the very next meeting. It’s not so,” Das said. The repo rate has been kept unchanged for 20 consecutive months and stands at 6.5 per cent at present.
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