New Delhi: Breaching the central bank’s four per cent target for the first time, consumer retail inflation rose to 15-month high of 4.62 per cent in October.
Driven by skyrocketing food and vegetable prices, retail prices have raised concerns among household consumers nationally. Food basket prices were the hardest hit, rising by 7.89 per cent, according to government data released on Wednesday. Incessant rain, that prolonged the monsoon and played havoc with farm output, is the culprit.
The inflation-based Consumer Price Index (CPI) was 3.99 per cent in September and 3.38 per cent in October 2018. However, food price grew 7.89 per cent in October as against 5.11 per cent in September, according to the data. Core inflation, excluding food and oil, for October stood at 3.5 per cent against 4 per cent in September.
Prices of cereals and products were also high at 2.16 per cent against 1.66 per cent a month ago. Vegetables inflation for October stood at 26 per cent against 15.4 per cent in September. Besides, pulses and products too recorded high of 11.72 per cent in October against 8.4 per cent in previous mon-th, according to the data.
October also saw exorbitant onion and tomato pr-ices due to unprecedented rains, disruption in supply chain and acquisition restrictions on traders.
However, most economists feel that the rise is temporary and expect average retail inflation to remain below four per cent in the current financial year. The rise in inflation is unlikely to sway the Monetary Policy Committee (MPC), which meets next month.
Rahul Gupta of Emkay Global Financial Services said that the retail inflation hike was a surprise. “We expect the RBI to continue easing on the back of sluggish growth and weak core inflation and cut its repo rate at December meeting,” he said.
Despite a slew of measures in the financial sector taken by finance minister Nirmala Sitharaman lately, the RBI in October too slashed the primary lending rate by 25 basis points to 5.15 per cent— the fifth consecutive rate cut since February— to boost growth.
