New Delhi, Nov 12 (Mayank Nigam) Driven primarily by food prices, India’s consumer price index (CPI)-based inflation surged to 14-month high of 6.21per cent in the month of October this year dashing hopes of interest rate cut immediately. While retail inflation rate in the month of September this year was 5.49%, it was 4.87% in October 2023. “Year-on-year inflation rate based on All India Consumer Price Index (CPI) for the month of October, 2024 is 6.21%. Corresponding inflation rates for rural and urban areas are 6.68% and 5.62%, respectively,” an official release said on Tuesday. The latest inflation print has breached the upper limit of the Reserve Bank of India’s medium term target range of 2-6%.
As per data released by the Ministry of Statistics and Programme Implementation (MoSPI), food inflation in the month of October this year stood at 10.87%. Food inflation rates for rural and urban areas in the month of October this year were 10.69% and 11.09%, respectively. “The food and beverage inflation surged to an eye-watering 9.7% in October 2024 from 8.4% in the previous month, amid an uptick in seven of the 12 food groups. Vegetables inflation hardened to a 57-month high of 42.2% from 36.0% in September 2024, which weighed on the food and beverages and, consequently, the headline inflation prints in the month,” said ICRA chief economist Aditi Nayar. The core (CPI excluding food and beverages, fuel and light, and petrol and diesel for vehicles) inflation inched up to 4% in October this year from 3.8% in September 2024, the highest level since November 2023.
“With the CPI inflation breaching the 6% mark in October 2024 and expected to exceed the Monetary Policy Committee’s estimate for Q3 FY2025 by at least 60-70 bps, a rate cut in the December 2024 policy review appears ruled out, in spite of our projection of a sub-7% GDP growth print for Q2 FY2025. We anticipate that a shallow rate cut cycle of 50 bps may commence in February 2025 or later,” Nayar said. Rajani Sinha, Chief Economist, CareEdge Ratings, said, “Current trends suggest that inflation in the second half of FY25 may exceed the RBI’s October projections, potentially delaying the start of a rate-cutting cycle. With headline inflation above the upper end of the RBI’s tolerance band, the MPC will remain cautious and is likely to maintain status quo on policy rates in the December meeting.” Commenting on inflation numbers, Nish Bhatt, Founder & CEO, Millwood Kane International, said that the rise in retail inflation in October was fuelled largely by food and vegetables, irregular monsoons, and supply-side issues.