India’s retail inflation up by marginal 4.48 percent from 4.35 percent

India’s benchmark inflation rate, as measured by the Consumer Price Index was flat between September and October.

India’s benchmark inflation rate, as measured by the Consumer Price Index was flat between September and October.
India’s benchmark inflation rate, as measured by the Consumer Price Index was flat between September and October.

India’s October retail inflation inches up on food prices

India’s retail inflation inched up in October on the back of higher-than-expected food and fuel prices but remained within the Central Bank’s comfort zone, official data showed. Accordingly, data furnished by the National Statistical Office showed that Consumer Price Index (CPI) inched up to 4.48 percent last month from 4.35 percent in September 2021.

However, on a YoY basis, the rise in last month’s retail inflation was slower than the 7.61 percent rise recorded for October 2020. The macro-economic data assumes significance as retail inflation remained well within the range of the Reserve Bank of India‘s set target of 2-6 percent for CPI inflation.

The fuel tax cut by the government last week is expected to provide little comfort to the headline inflation number. According to economists, the monetary policy committee is to continue with an accommodative monetary policy stance to support growth in the current fiscal.

Region-wise, the CPI Urban rose to 5.04 percent last month from 4.57 percent in September and the CPI Rural came down to 4.07 percent from 4.13 percent. As per the NSO data, the rate of rising in the Consumer Food Price Index increased to 0.85 percent last month from 0.68 percent in September.

The CFPI readings measure the changes in retail prices of food products. In terms of CPI YoY inflation rate, pulses and products’ prices jumped by 5.42 percent in October 2021.

Besides, meat and fish prices rose by 7.12 percent, however, eggs became cheaper by 1.38 percent, nevertheless, the overall price of the food and beverages category was up 1.82 percent and oils and fats prices rose 33.50 percent.

On the other hand, vegetable prices declined by 19.43 percent. Furthermore, as per the official data, the inflation rate for fuel and light was at 14.35 percent. The sub-group of clothing and footwear showed a price acceleration of 7.53 percent.

“Despite base effect, still-high fuel costs, input cost pressures and seasonal turn in some food prices in coming months, etc. could even see inflation rise towards more than 6.2 percent later in the fiscal year,” said Madhavi Arora, Lead Economist, Emkay Global Financial Services.

“We revise our forecast by 25bps to 5.5 percent for FY22, as we reckon supply-side bottlenecks, higher imported commodity inflation, and high pump prices would pose a countering upside pressure on inflation.”

According to Aditi Nayar, Chief Economist, ICRA: “The uptick in the YoY CPI inflation in October 2021 relative to the previous month, while mild, was pretty broad-based, with the hardening in the inflation for clothing and footwear, and miscellaneous items suggesting that reviving demand is nudging producers in some sectors to pass through the input price pressures, resulting in a pickup in the core inflation to 5.8 percent in that month.”

HDFC Bank in its note said that it expects inflation to rise above 5 percent yet again from December, led by higher input/ commodity prices and as favourable base effect wanes.

[With Inputs from IANS]

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