India’s retail inflation rose to 7.41% in September from 7% in the previous month, government data on Wednesday showed. With this inflation has remained above the Reserve Bank of India’s (RBI) upper margin of 6% for three consecutive quarters.
Food inflation, which accounts for nearly half the CPI basket, surged 8.60% in September 2022 as compared 7.62% in August.
Fueled by irregular rainfall and supply disruptions from Russia-Ukraine war, prices of daily consumables like cereals and vegetables, which form the largest category in the inflation basket, have soared over the past two years.
Prices of vegetables increased 18.05% year-on-year in September. Apart from this, the spices saw a rise of 16.88% while cereals and products rose 11.53% and milk and products gained 7.13%. Egg prices slipped 1.79% but fruits grew 5.68%.
Apart from food and beverages, the fuel and light segment surged 10.39%, clothing and footwear rose 10.17% and the housing segment inched up 4.57%.
Fuel and electricity grew 11.44% year-on-year in September,
compared with a 10.78% increase in the previous month, according to data.
Housing sector gained 4.57% year-on-year in September as against a 4.06% rise in August. Clothing and footwear segment surged 10.17% year-on-year in the the reported month, compared with a 9.91% increase in the previous month.
With the inflation remaining above 6%, this is likely to pressure the RBI, which has raised its key repo rate by 190 basis points in four meetings this year, to intensify its interest rates hikes. The central government has directed the RBI to ensure that retail inflation remains in the range of 2-6%.
Separately, India’s industrial growth contracted 0.8% in August from 2.4% in July and 13% in year ago period, showed data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Wednesday. A favourable base had kept the growth rate in double digits in May and June, but it fell significantly in July as the low base effect faded.
The manufacturing sector contracted 0.7% year-on-year to 131.0 in August. The mining output contracted 3.9%, while power generation increased 1.4% during August.