Vegetables, cereals, fruits, oils and fats led the price surge, which pushed the food and beverages inflation rate closer to double digits at 9.7%. High food inflation has been identified as a key reason for the slowdown in demand in urban areas by some consumer goods companies as households have been hurt by soaring prices.
The data released by the National Statistical Office showed retail inflation, as measured by the consumer price index (CPI), soared to 6.2% in Oct, higher than the 5.5% in Sept. Rural inflation was higher at 6.7%, while urban was at 5.6%. The food price index surged to 10.9% in Oct, up from the 9.2% in Sept.
Inflation in vegetables was up 42.2% during the month while that in oils and fats inched up to 9.5%. Inflation in fruits was at 8.4%.
“CPI inflation has shocked with a 6.2% reading. This ensures that no rate action can be considered in Dec. Food inflation has spread to oils and hence the basket of cereals, pulses, fruits, vegetables and oils are the problem areas. Inflation may recede albeit gradually for cereals and pulses but will take longer for vegetables. Core inflation also has an upward bias with personal care products showing higher inflation as input costs are transmitted,” Madan Sabnavis, chief economist at Bank of Baroda, said.
Earlier this month, RBI governor Shaktikanta Das had said that the inflation rate would be high in Oct and had indicated that he was not in a hurry to cut rates. RBI kept policy rates unchanged at 6.5% for the tenth consecutive time in Oct, pointing to the risk to inflation from elevated food prices.
Separate NSO data showed industrial output growth recovering in Sept after a contraction in Aug. The data showed the index of industrial production grew by 3.1%, from a 0.1% contraction in Aug. The manufacturing sector rose by 3.9% during the month. “The recovery was largely driven by an improvement in the manufacturing sector,” Rajani Sinha, chief economist at ratings agency CareEdge, said.
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