High food prices, especially those of vegetables like onions, kept India’s sequential retail price inflation in October at an elevated level.
Sequentially, the Consumer Price Index (CPI), which gauges the retail price inflation, spiked in October to 7.61 percent from 7.27 percent in September.
As per the data furnished by the National Statistical Office (NSO), CPI Urban rose to 7.40 percent in October from 7.26 percent in September, while CPI Rural increased to 7.69 percent last month from 7.36 percent in September.
As per the data, the Consumer Food Price Index increased to 11.07 percent in October from 10.68 percent in September. The CFPI readings measure the changes in retail prices of food products.
On a YoY inflation rate, prices of vegetables and pulses and products jumped by 22.51 percent and 18.34 percent, respectively, in October. Furthermore, meat and fish prices rose 18.70 percent and eggs became dearer by 21.81 percent.
In addition, the fuel and light category under the CPI rose by 2.28 percent. “Despite the favorable base effect and the abundant Kharif harvest, food inflation increased further in October, led by vegetables as well as various other items. However, fresh arrivals in the market may help cool off prices in the near term,” said ICRA’s Principal Economist Aditi Nayar.
“Worryingly, the core inflation also rose to 5.7 percent in October from 5.5 percent in September, led by a number of items such as clothing and footwear, housing, health, and recreation and amusement,” Nayar added.
According to India Ratings & Research’s Principal Economist Sunil Kumar Sinha: “Retail inflation in October rose to a 77-month high of 7.61 percent. Barring March, it has remained in excess of 6 percent in 2020 to date. Protein-based items, oil and fats, vegetables, pulses, and products led to food inflation rising to 11.07 percent (six-month high).
“As a fall out of Covid-19, inflation from health and recreation and amusement has increased and is unlikely to ease in the next few months. People’s preference for a safe transport option for commute has resulted in transport and communication inflation to increase consistently from March.”
Investment consulting firm Millwood Kane International’s Founder and CEO Nish Bhatt said: “This is for seven months that the inflation print is above the RBI mandated level of 6 percent. Supply disruption created due to Covid-19 and unseasonal rain in some pockets of the country has led to a rise in inflation.
“The elevated level of inflation is a cause of worry and will impact RBI’s ability to act on interest rates, though the central bank expects inflation to moderate by the end of FY21.”
