India’s retail inflation surges to 6.21% in October, reaches 14-month high

The retail inflation in India accelerated to 6.21% in October, up from the 5.49% rate in September, according to data released by the ministry of statistics and programme implementation.

The ministry said that the year-on-year inflation rate based on the All India Consumer Price Index (CPI) reached 6.21% in October, with corresponding inflation rates for rural and urban areas at 6.68% and 5.62%, respectively.

Food prices contributed heavily to the inflationary trend, the release said.

The Consumer Food Price Index (CFPI), which tracks food price inflation, rose to 10.87% in October, provisionally up from the previous month. Rural and urban food inflation for October stood at 10.69% and 11.09%, respectively.

Other contributors to inflation included the housing and electricity sectors. The year-on-year housing inflation rate for the month of October was 2.81%, up from 2.72% in September, while the YoY electricity inflation rate was at 5.45%, up from 5.39%.

While pulses, eggs, sugar, and confectionery prices saw a decline, the inflation rate for vegetables, fruits, and oils and fats registered a marked increase, adding pressure on household budgets across the country.

"The key culprit behind the spike in inflation in October was food costs, especially the over 40% increase in staple vegetables and pass-through of duty increases in oilseeds," Reuters quoted Radhika Rao, senior economict at DBS Bank, Singapore, as saying.

"This reading will lift the quarterly inflation above the RBI's projection for the second consecutive quarter," she added.

Dipanwita Mazumdar, economist at Bank of Baroda in Mumbai, noted, "The transitory shocks to food inflation led by a few volatile components are becoming more entrenched now. Especially, the price cycle for vegetable inflation has lasted for more than a year now."