India’s retail inflation hits 9-month high as food prices soar

New Delhi : Government data released on Monday showed that the retail inflation rate rose to 5.49 percent in September, reaching a nine-month high due to increasing vegetable prices. In August 2023, the retail inflation rate based on the consumer price index (CPI) was 3.65 per cent, while in September of the same year, it rose to 5.02 per cent. In December 2023, the highest inflation rate recorded was 5.69 per cent. According to data from the NSO, the inflation rate in the food basket increased to 9.24 percent in September from 5.66 percent in August and 6.62 percent in the same month last year.

NSO stated that the rise in inflation in September 2024 is probably because of a strong base effect and weather conditions. Based on new data published on Monday, wholesale price inflation (WPI) increased to 1.84 pc in September due to rising costs of food items, particularly vegetables. In August, the inflation based on the wholesale price index (WPI) was recorded at 1.31 per cent. In September of last year, it stood at (-) 0.07 percent. The Indian government has directed the Reserve Bank of India (RBI) to maintain the Consumer Price Index (CPI) inflation rate at 4 per cent, with a 2 per cent margin, despite keeping the key lending rate unchanged recently. In September, the yearly inflation rate for vegetables was close to 36 percent, while for pulses and products it was 9.81 percent. Fruits were also more expensive. Yet, spice inflation was lower in September than in the same month last year. The increase in food and drinks inflation in September 2024 compared to August 2024 was mainly driven by vegetable inflation, which rose to 36 percent - a 14-month peak - from 10.7 percent the month before.

Aditi Nayar, Chief Economist and head of Research and Outreach, Icra Ltd, mentioned that apart from this, food and beverages inflation dropped to 3.9 per cent in September 2024, down from 4.3 per cent in August 2024, marking a 59-month low. When announcing the bi-monthly monetary policy on October 9, RBI Governor Shaktikanta Das emphasized the importance of closely monitoring the price situation and controlling inflation carefully. Das had also mentioned that the CPI figures for September were expected to show a significant increase because of negative base effects and a rise in food prices, primarily due to the lingering impact of low production of onion, potato, and chana dal (gram) in 2023-24, along with other factors. According to NSO data, the national inflation rate is 5.49 pc, with rural and urban rates at 5.87 pc and 5.05 pc respectively. Bihar had the highest inflation rate at 7.5 per cent, whereas Delhi had the lowest at 3.67 per cent. Food item prices experienced more inflation in urban areas. In September, the housing inflation rate increased by 2.78 per cent compared to the previous year.