India’s retail inflation rose to an eight-month high of 7.34% in September over rising prices of essential kitchen items, government datas showed on Monday, making the Reserve Bank of India’s RBI’s task to push growth by reducing the interest rate even more difficult in coming the days.
The Consumer Price Index (CPI)-based inflation was 6.69% in August and 3.99% in September 2019. In August, the retail inflation, which is measured by the consumer price index (CPI), grew 6.69%. It was powered by an increase in the price of food as well as transport and mobile phone bills. The number was 0.04 percentage points lower than in July, but still higher than the Reserve Bank of India’s (RBI’s) comfort level, 6% -- the fifth time in as many months that it has exceeded this.
The central bank factors in retail inflation while deciding on its key interest rate. Inflation has been hovering above 4% since October 2019. The previous high in the CPI was witnessed at 7.59% in January 2020.
The National Statistical Office (NSO) data showed that the Consumer Food Price Index (CFPI) was 10.68% in September, up from 9.05% in the previous month. The inflation in the vegetable segment was 20.73% in September, way up from 11.41% in the preceding month. The rate of price rise in the fruits was also high over August. Data showed that the rate of price rise in the protein-rich eggs was 15.47% in September compared to 10.11% a month before that.
{{/usCountry}}The National Statistical Office (NSO) data showed that the Consumer Food Price Index (CFPI) was 10.68% in September, up from 9.05% in the previous month. The inflation in the vegetable segment was 20.73% in September, way up from 11.41% in the preceding month. The rate of price rise in the fruits was also high over August. Data showed that the rate of price rise in the protein-rich eggs was 15.47% in September compared to 10.11% a month before that.
{{/usCountry}}ICRA Limited economist Aditi Nayar said the CPI inflation hardened beyond expectations in September. “Even though the high food inflation will eventually prove to be transient, with the favourable base effect and Kharif arrivals to soon initiate a downward trajectory, the average inflation figures for FY2021 as well as H2 FY2021 are likely to be uncomfortably high,” Nayar said, according to news agency PTI.
The retail inflation was also high month-on-month in ‘meat and fish’, and ‘pulses and products’. However, it was lower in ‘cereals and products’ and ‘milk and products’. The government data further showed that the CPI-based price rise was lower in the ‘fuel and light’ segment at 2.87% during September over 3.10% in August.
Nayar, according to PTI, said amidst the unpalatable headline and food inflation figures, the relatively stable core inflation over the last three months offers some relief, keeping the hopes of a February 2021 rate cut alive.
RBI has been asked by the government to keep the retail inflation at 4%, with a margin of 2% on either side. RBI Governor Shaktikanta Das had said last week, while announcing the monetary policy, that retail inflation is expected to remain close to the targeted level by the last quarter of the current fiscal year.
(With agency inputs)