Retail Inflation Hits 14-Month High at 6.21 Per Cent In October As Food Prices Surge, Dampening Hopes For RBI Rate Cut

The retail inflation rate climbed to a 14-month peak of 6.21 per cent in October, driven by a significant increase in food prices, particularly for fruits, vegetables, meat, fish, and oils and fats, according to data released by the National Statistical Office (NSO) on Tuesday. Food inflation, as measured by the Combined Food Price Index (CFPI), rose sharply to 10.87 per cent in October — the highest in 15 months — up from 9.24 per cent in September and 6.61 per cent in the same period last year.

Food inflation has reached double digits for the first time in 14 months, last seen in July 2023, according to an NSO statement released at 4 p.m. — an earlier release time than the usual 5:30 pm. With the October figures, the headline retail inflation rate, measured by the Consumer Price Index (combined), has once again exceeded the four per cent mark, breaching the Reserve Bank of India’s (RBI) medium-term inflation target range of four per cent +/- two per cent for the second month in a row. This inflation surge, as highlighted by RBI Governor Shaktikanta Das last week, has dampened hopes for an immediate rate cut by the central bank in its upcoming December monetary policy meeting.

Food and beverages, which make up 45.86 per cent of the total weight in the Consumer Price Index (combined), recorded an inflation rate of 9.69 per cent in October, up from 8.36 per cent in September. Inflation for perishable items like vegetables jumped to 42.18 per cent in October from 35.99 per cent in September, while fruit inflation increased to 8.43 per cent from 7.65 per cent.

Inflation rates edged up for cereals, reaching 6.94 per cent in October from 6.84 per cent in September, and for meat and fish, rising to 3.17 per cent from 2.66 per cent. There was a notable increase in the inflation rate for oils and fats, which climbed sharply to 9.51 per cent in October from 2.47 per cent in September, reflecting higher global edible oil prices and the effects of imported inflation. The inflation rate for housing also rose slightly, moving to 2.81 per cent in October from 2.78 per cent in September.

Services inflation, represented by the miscellaneous category, rose to 4.32 per cent in October from 4.05 per cent in September. Within this category, the personal care and effects segment recorded an inflation rate of 10.99 per cent in October, up from nine per cent the previous month.

A region-wise breakdown of inflation data revealed that rural inflation rose to 6.68 per cent in October from 5.87 per cent in September, while urban inflation increased to 5.62 per cent from 5.05 per cent. In terms of food inflation, rural areas saw a rise to 10.69 per cent in October, up from 9.08 per cent in September, whereas urban areas experienced a higher food inflation rate of 11.09 per cent in October, compared to 9.56 per cent the previous month.