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Inflation at 7-month high on higher food, fuel prices

15 November 2017

According to the data furnished by the Ministry of Statistics and Programme Implementation, October's consumer price index (CPI) inflation rose to 3.58 per cent from 3.28 per cent in September.

Retail inflation inched up to a seven-month high in October on the back of higher food, fuel and housing prices, dashing hopes of any cut in interest rates by RBI for now.

The prices of food products, which have the highest weightage in the product basket that determines the inflation number, grew 2.26 per cent.

Pan, tobacco and intoxicants saw high inflation and settled at 6.91 per cent. Clothing and footwear (4.76), housing (6.68), and fuel and light (6.36) were costlier on sequential basis. "Similarly, the policymakers should check and address prices of products, including paddy, that are hovering at higher levels and are also of national importance", said Rawat. However, fruits were comparably cheaper in October on a sequential basis.

However, inflation in various household goods and services declined, implying the goods and services tax (GST) did not have much impact. It was lower by 22.51 per cent in September.

Retail inflation has been steadily rising since June, when it eased to 1.46 per cent - its slowest pace since India started releasing such figures in January 2012, based on combined data for rural and urban consumers.

The government data released today showed that inflation in food articles more than doubled to 4.30 percent in October. Crucial services such as education, healthcare, personal care, etc have seen an inflation of 3.48 per cent.

All eyes will be on the current fiscal's sixth bi-monthly meeting of the Monetary Policy Committee, headed by RBI Governor Urjit Patel, on December 5-6.

Some analysts expect India's decision on Friday to slash tax rates on 178 items such as chocolates and detergent powders to 18 percent from 28 percent could marginally lower retail inflation in coming months.