Retail Inflation Edges Higher To 4.48% In October Due To Rise In Fuel Prices

Retail Inflation Edges Higher To 4.48% In October Due To Rise In Fuel Prices
Retail Inflation in October 2021: Retail inflation rose to 4.48 per cent last month
  1. This was higher than a recent poll conducted by news agency Reuters, which estimated that the retail inflation declined to a six-month low, at around 4.32 per cent in October. The Reuters poll was conducted between November 8-9 with 43 economists. (Also Read: October Retail Inflation Likely Near 6-Month Low, Within RBI's Tolerance Band )
  2. The food inflation - determined by the consumer food price index rose to 0.85 per cent in October, compared to 0.68 per cent in September. The inflation in 'fuel and light' category remained elevated at 14.35 per cent during the month, according to data released by the National Statistical Office (NSO).
  3. The rise in inflation was mostly due to rise in prices of fuel, edible oil prices, and non-alcoholic beverages. Retail inflation edged higher last month despite the base effect as it stood at 7.61 per cent in October 2020, while the food inflation was at 11 per cent in the year-ago period.
  4. Inflation in 'oil and fats' - or edible oil was at 33.5 per cent, while non-alcoholic beverages registered an inflation of 11.4 per cent - both of which are factored in 'food and beverages' category. Overall, inflation in 'food and beverages' was 1.82 per cent in October.
  5. In terms of index value, the consumer price index was 165.5 in October, compared to 163.2 in September, registering a change of 1.41 per cent on a monthly basis, according to government data.
  6. At 4.48 per cent in October, retail inflation is within the Reserve Bank of India's comfort zone of two per cent - six per cent, for the fourth straight month. The Reserve Bank of India (RBI), which mainly factors retail inflation while arriving at its bi-monthly monetary policy, has been mandated by the government to keep it at four per cent, with a tolerance band of two per cent on either side.
  7. The central bank has projected the CPI inflation at 5.3 per cent for financial year 2021-22, with 5.1 per cent in the second quarter, 4.5 per cent in third, and 5.8 per cent in the last quarter of the fiscal, with risks broadly balanced.
  8. “While CPI is at a comfortable level around four per cent, inflationary concerns persist with high core inflation. While the cut in excise duty on petrol/ diesel will provide reprieve to inflation, high global commodity prices including energy prices, pose a threat for future inflation,'' said Ms Rajani Sinha, Chief Economist & National Director - Research, Knight Frank India.
  9. The RBI tracks the retail inflation - or the rate of increase in consumer prices as determined by the Consumer Price Index (CPI). Separate government data today showed that factory output rose to 3.1 per cent in October.
  10. “....we revise our forecast by 25bps to 5.5 per cent (RBI:5.3%) for FY22, as we reckon supply-side bottlenecks, higher imported commodity inflation and high pump prices would pose a countering upside pressure on inflation,'' said  Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services.
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