India’s retail inflation rose to a 9-month high of 5.49% in September, driven by increasing vegetable prices and a lower base compared to last year. This uptick surpasses the Reserve Bank of India’s 4% target for the first time since July.
Food inflation, which accounts for half of the overall CPI basket, surged to 9.24% in September from 5.66% in the previous month. Rural inflation increased to 5.87%, while urban inflation rose to 5.05%.
Vegetable prices spiked by 35.99% in August, while pulses & products inflation eased to 9.81%. Heavy rains disrupted crop availability, leading to higher prices for essential food items.
Fuel and light inflation stood at (-) 1.39%, while housing inflation accelerated to 2.78% in September. Clothing and footwear inflation was at 2.71%.
The Reserve Bank of India retained the retail inflation projection at 4.5% for fiscal 2024-25, with Governor Shaktikanta Das emphasizing the need to closely monitor price trends to prevent inflation from rising again.
The RBI maintained its rates but shifted the stance to ‘neutral.’ The central bank is expected to take a forward-looking approach considering the impact of weather conditions on perishable costs and GDP performance.
In conclusion, India’s inflation rate hit a new high in September due to rising vegetable prices and a lower base from last year. The RBI is closely monitoring the situation to prevent inflation from exceeding the target range.
