Inflation Surge: Retail Prices Hit 14-Month High
Retail inflation in October hit a 14-month high of 6.21%, exceeding the Reserve Bank's tolerance threshold primarily due to escalating food prices. The consumer price index showed a significant rise, with food basket inflation reaching 10.87%. A rate cut in December appears unlikely.
- Country:
- India
Retail inflation in October has risen to a 14-month high of 6.21%, surpassing the Reserve Bank's upper tolerance limit, primarily due to increasing food prices. The consumer price index had been 5.49% in September and 4.87% a year ago, highlighting the significant recent inflation spike.
Food basket inflation soared to 10.87% in October from the previous month's 9.24%, according to data from the National Statistics Office. The government mandates the RBI to maintain retail inflation at 4%, with a permissible margin of 2% on either side, but current trends challenge this target.
Aditi Nayar, chief economist at ICRA, noted that food and beverage inflation led to the CPI breaching the upper tolerance level. Given current inflationary pressures, a rate cut in December seems improbable, although a shallow rate cut cycle may begin in early 2025.
(With inputs from agencies.)