Retail Inflation Surges to 9-Month High, Impact of Rising Food and Vegetable Prices
Retail Inflation Hits Record Levels
The retail inflation in India surged to a notable 5.5% in September, marking a nine-month peak. This uptick was predominantly attributed to the rising food prices across the country. In August, inflation was substantially lower at 3.65%.
Food Inflation Driven by Vegetables
Food prices increased by 1.18% on a sequential basis, contributing to a 0.62% rise in consumer prices. The inflation in vegetables has been particularly influential, with potato prices skyrocketing by 65% compared to the previous year. Onion prices also surged by 66.1%, while tomatoes increased by 42.2%.
Rates and Market Outlook
Additionally, edible oil inflation climbed to 2.5% amid government measures to regulate imports. Furthermore, fruit inflation reached a peak of 7.6%, compared to 6.5% in the preceding month.
Impact on Rate Cut Expectations
With these inflationary pressures, earlier last week, the Reserve Bank of India (RBI) opted for no changes to key rates in its Monetary Policy Committee (MPC) meeting, maintaining its stance but transitioning to neutral. The RBI projected an average inflation rate of 4.5% for 2024-25. Experts suggest a rate cut in December is unlikely unless CPI inflation notably drops below 5%.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.