India's Inflation Woes: Rising Food Prices Test RBI's Patience
India's retail inflation hits 6.21% in October, surpassing RBI's target. Food prices soared, especially vegetables at 42.18%. Rural inflation higher at 6.68%. Despite some ease, inflation remains a challenge. RBI's strategy includes steady repo rate at 6.5%. Crucial watch on Kharif harvesting.
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India's retail inflation in October surged to 6.21 percent, exceeding the Reserve Bank of India's upper tolerance limit of 6 percent. Data from the Ministry of Statistics and Programme Implementation reveals food inflation at a noteworthy 10.87 percent, with vegetable prices soaring by a staggering 42.18 percent.
October's rural and urban inflation rates registered at 6.68 percent and 5.62 percent, respectively. On the housing front, the year-on-year inflation for October 2024 settled at 2.81 percent, slightly higher than 2.72 percent recorded in September 2024. It's important to note that the housing index is urban-specific.
While there has been a notable decrease in the inflation of pulses, eggs, sugar, and spices, the steep rise in the cost of vegetables, fruits, and oils largely contributes to high food inflation. Notably, August's retail inflation was recorded at 3.65 percent, marking the second lowest in five years before a steady uptick.
Persistently high food prices pose a challenge for policymakers aiming to stabilize retail inflation at 4 percent. Today's data underscores the divergence from the target. Although inflation is a global issue, India has largely managed its trajectory effectively. The minor monthly decline, excluding June, came amid the RBI maintaining the repo rate for a ninth consecutive time.
Moving forward, the Kharif harvest season and Rabi sowing developments will be crucial. The RBI's steady repo rate of 6.5 percent remains a key tool in restraining inflation. The repo rate is the interest rate at which the RBI lends to commercial banks. (ANI)
(With inputs from agencies.)