Retail inflation at 7-month high in October on higher food, fuel prices

Retail inflation at 7-month high in October on higher food, fuel prices

India News

The Consumer Price Index (CPI) or retail inflation stood at 3.58 per cent in October this year in comparison with 4.2 per cent in the same period last year, according to a data released by the government.However, compared to the September’s figure of 3.28 per cent, it showed a change of 0.3 per cent to hit a seven-month high of 3.58 per cent in October, the Central Statistics Office (CSO) data showed.”A sharp increase of 30 basis points in overall inflation to 3.58 per cent on the back of an increase of 50 basis points in food inflation, and an uptick of 80 bps in fuel inflation rules out a remote chance of policy rate cut in December. Hardening trends in global crude prices and growth robustness in the US would keep RBI’s hands tied,” Rupa Rege Nitsure, Group Chief Economist, L&T Financial.The numbers are mainly driven by higher prices of food and fuel. Food inflation (CFPI) stood at 1.90 per cent, up from 1.25 per cent in September.Retail inflation came in at 3.28 per cent (revised) in September, unchanged from August, despite softening of vegetable and cereal prices. The CSO had revised downwards the August inflation to 3.28 per cent from 3.36 per cent.The inflation rate has been steadily rising since June, when it eased to 1.46 per cent – its slowest pace since India started releasing such figures in January 2012, based on combined data for rural and urban consumers.The spike in inflation is likely to further reduce chances of a cut in key interest rates by Reserve Bank of India (RBI) which will hold a policy review meeting on December 6.”There is, however, a low likelihood of a rate cut by the RBI in the immediate term,” said Aditi Nayar, an economist at ICRA, an Indian arm of the rating agency Moody’s, adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.Earlier this month, the government had released factory output data which showed that Index of Industrial Production (IIP) had grew at a lower-than-expected 3.8 per cent in September.