Published: Mon, November 13, 2017
Worldwide | By Isabel Fisher

Retail inflation at seven-month high driven by food and fuel prices

The Consumer Price Index (CPI) or retail inflation stood at 3.58% in October this year in comparison with 4.2% in the same period last year, according to a data released by the government.

The retail inflation rose up to seven-month high to 3.58 in October due to the high prices of food items, especially vegetables, eggs, milk and their products, and tobacco products and housing sector.

"A sharp increase of 30 basis points in overall inflation to 3.58 percent on the back of an increase of 50 basis points in food inflation, and an uptick of 80 bps in fuel inflation rules out a remote chance of policy rate cut in December".

"Today's reading has reaffirmed our position that the inflation trajectory in the second half of this year could be lower than the RBI's projected path of 4.2 percent to 4.6 percent".

The rate of price rise in the vegetable segment nearly doubled to 7.47% as against 3.92% in September. Similarly, prices of pulses fell -23 percent, as compared with (-) 22.51 percent in September. The inflation for sugar and confectionery items increased and settled at 6.75 per cent. Spices saw some decline in price and settled at (-) 2.15 points.

The data would diminish the odds of further rate cuts by the Reserve Bank of India as inflation nears the central bank's 4% long-term target, making an overshoot likely later this year. Higher inflation was also noted in housing segment.

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