Photo used for representation purposes only. File | Photo credit: Sushil Kumar Verma
India’s retail inflation rebounded to a nine-month high of 5.5% in September, ending a two-month run below the central bank’s average target of 4%, thanks to a revival in rising inflation. food prices up 9.24% after hovering below 6%. mark through July and August.
Vegetable inflation rose from 10.7% in August to a 14-month high of 36% in September, while the increase in fruit prices gained momentum, reaching 7.65%, up from 6.5% a month earlier .
For rural consumers, inflation approached the 6% mark – the upper tolerance limit for the Reserve Bank of India (RBI) – at 5.9%, while their urban counterparts faced a 5.05% price hike last month . However, rural India experienced relatively milder food inflation at 9.1%, compared to a 9.6% increase for urban consumers.
Pulses prices rose 9.81%, retreating from inflation above 10% for the first time in 16 months, even as price increases in grains and eggs eased marginally to 6.8% and 6.3% respectively . Edible oils, however, rose 2.5%, ending a 19-month streak of falling prices amid a global price hardening.
In addition to food, households saw a sharp 9% increase in prices for personal care and personal items in September. Prices for this category rose by 8.4% in July and fell slightly to 7.9% in August. Core inflation, excluding food and energy prices, also rose to a nine-month high of 3.8%, in line with RBI Governor Shaktikanta Das’ assertion that this element of the price rise had bottomed out.
Rate reduction
While the RBI changed its monetary policy stance to neutral last week, it may take some time for expectations of a rate cut to materialize. The central bank forecasts average inflation of 4.8% for the October-December quarter, before cooling to 4.2% in the quarter. first quarter of 2025.
“For the December monetary policy review to see a rate cut, either consumer price inflation will need to level off significantly to below 5.0% in October or GDP growth for the second quarter of FY2025 will be significantly below expectations. the MPC should lie,” said ICRA chief. economist Aditi Nayar.
“It is likely that the increase in the inflation rate for the month of September 2024 is due to the high base effect and weather conditions,” said the National Statistical Office (NSO), even as it emphasized that “in pulses there has been a significant decrease of inflation is observed”. and products, spices, meat & fish and sugar & confectionery”.
The Kharif crop could cool down prices
Economists expect some relief on the inflation front during this month and November, pinning their hopes on favorable base effects from last year, and on the prospects of food prices cooling down with the arrival of the Kharif crop.
As many as eight of the 22 states and union territories for which the NSO calculates inflation rates saw higher price growth than the national average of 5.5%. Six of these states recorded inflation above 6% in September: Bihar (7.5%), Chhattisgarh (7.4%), Uttar Pradesh (6.74%), Odisha (6.6%), Haryana ( 6.2%) and Gujarat (6.05%).
Published – Oct 14, 2024 5:54 PM IST
