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India’s Retail Inflation
Context
India's retail inflation surged to 6.21% in October 2023, marking the highest level in 14 months. The inflation rate exceeded the Reserve Bank of India's target range of 2% to 6% for the first time since August 2023. This rise in inflation is being attributed primarily to sharp increases in food prices, especially vegetables and edible oils.
Key Findings
- Overall Inflation Rate
- In October, India's retail inflation stood at 21%, up from 5.49%in September.
- This marked a significant jump from earlier months: 65% in Augustand 3.54% in July.
- Food Prices Drive Inflation
- The inflation in food pricessurged to a 15-month high of 10.87% in October, compared to 24% in September.
- Food inflation was notably higher in urban areas (11.09%)compared to rural areas (10.69%).
- Key Drivers of Food Inflation
- Vegetablessaw the steepest price rise, with inflation reaching 18%, up from 35.99% in September.
- Edible oilsalso saw a sharp increase in inflation, rising from 47% in September to 9.51% in October, largely due to a 27% rise in global prices caused by supply disruptions.
- Causes of Food Price Hikes
- The surge in vegetable prices, particularly tomatoes and onions, was driven by unseasonal rainsand extended monsoons in certain parts of India.
- The global rise in edible oil prices is due to supply disruptions, affecting inflation in the oils and fats sector.
Fact Box: CPI-based Inflation or Retail Inflation
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