Retail inflation surges to 6.2% in October

India’s retail inflation surged further from the nine-month high of 5.5% in September to the highest level in well over a year of 6.2% in October, led by a 10.9% spike in food prices.

October’s price rise pace, the fastest in 14 months, also marked a breach of the Reserve Bank of India’s upper tolerance limit for inflation, with rural India facing a sharper uptick of 6.7%, while urban consumers encountered an inflation of 5.6%.

“High food inflation in October, 2024 is mainly due to increase in inflation of vegetables, fruits and oils and fats,” the National Statistical Office said, while noting a “significant decline in inflation” in Pulses, Eggs, Sugar, and Spices.

Compared to September, the Consumer Price Index (CPI) rose 1.3%, with a slightly higher uptick of 1.42% in rural India. However, the Consumer Food Price Index (CFPI) was up 2.6%, with rural and urban areas facing the same spike in costs.

On a year-on-year basis, rural food prices were 10.7% higher, while food inflation in urban India was even higher at 11.1% this October.

Vegetables Inflation bounced up from 36% in September to 42.2% in October, while edible oil prices shot up 9.5%, the highest spike in nearly two years, from about 2.5% in the previous month. Fruit prices also hardened by 8.4%, although pulses inflation eased to 7.4%, after 17 months of double-digit rise in prices.

While the Finance Ministry has noted that the current bout of inflation is driven by a few food items like vegetables, and is not feeding into broader inflation trends, October’s print shows a 11% rise in costs to households for personal care and effects, up from 9% in September.

At its last monetary policy review, the RBI had projected an average inflation of 4.8% for the October to December quarter or the third quarter (Q3) of 2024-25, before declining to 4.2% in the final quarter. However, for that arithmetic to hold after October’s CPI spike, the price rise trend would have to soften to about 4.1% through this month and December.

Published - November 12, 2024 04:30 pm IST