India’s retail price inflation, based on the Consumer Price Index (CPI), rose to 6.21 per cent in October as higher prices of food items such as vegetables spiked during the month, figures released by the Ministry of Statistics on Tuesday showed.
The retail inflation has increased from 5.49 per cent recorded in September as the prices of vegetables surged by as much as 42.18 per cent in October as the late withdrawal of the monsoon this year resulted in damage to crops and reduced supply in the market.
"During the month of October, a significant decline in inflation is observed in pulses & products, eggs, sugar & confectionery and spices subgroup. High food inflation in October is mainly due to increase in inflation of vegetables, fruits and oils and fats," according to the official statement.
The prices of edible oils went up by 9.51 per cent during the month while the overall food price index increased by 10.87 per cent, the figures showed.
The year-on-year housing inflation rate for October is 2.81 per cent. The corresponding inflation rate for the month of September 2024 was 2.72 per cent. The housing index is compiled for the urban sector only.
The All India Electricity index and inflation for the month of October 2024 are 162.5 and 5.45 per cent, respectively. The corresponding index and inflation for the month of September 2024 were 162.4 and 5.39 per cent, respectively.
This is the first time that the rate of retail inflation has crossed the RBI’s upper limit of 6 per cent. The RBI is waiting for the retail inflation to come down to 4 per cent before it can go in for an interest rate cut to propel growth.
Reserve Bank Governor Shaktikanta Das said last week that although the RBI had shifted towards a softer neutral monetary policy stance to spur growth this did not mean that an interest rate cut would happen immediately.
Addressing a media event, the RBI Governor said: "A change in stance doesn't mean there will be a rate cut in the very next monetary policy meeting."
He said there were still significant upside risks to inflation and "a rate cut at this stage would be very risky".
The RBI at its monetary policy review kept interest rates unchanged for the 10th straight meeting, but switched its monetary policy stance to ‘neutral’ from ‘withdrawal of accommodation.’ This had led to speculation that the way had been paved for an interest rate cut.