Eye on the price: Retail inflation at 5.54% in September, most on new base
India's retail inflation increased to 5.54% year-on-year in September, the highest since January. This rise is attributed to higher food prices, particularly onions and other essentials. Economists predict inflation could approach 6% in the coming months, influencing upcoming policy decisions. The Reserve Bank of India has indicated a likelihood of rate hikes due to ongoing price pressures. Rural…
India's retail inflation surged to 5.54% year-on-year in September, marking the highest level since January. This increase brings economists closer to the possibility of further policy rate hikes, as the inflation rate remains above the Reserve Bank of India's (RBI) 4% target for the fourth straight month. The RBI has a tolerance band of 2 percentage points on either side of the 4% level.
Aditi Nayar, ICRA's chief economist, predicts another rate hike in December, although it seems inevitable. Rising food prices, specifically onion prices, have significantly contributed to the inflation surge. Food inflation jumped to 7.7% from 6% in August, with rural food inflation at 8.1%, higher than the 7.2% in urban areas. Consumption levies were reduced last September, lowering the year-ago base, which also played a role in the inflation increase.
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