India’s retail inflation at 7.34% in September1 min read . Updated: 12 Oct 2020, 07:03 PM IST
Reserve Bank of India (RBI) Governor Shaktikanta Das said that in September 2020 round of the central bank’s survey, households expects inflation to decline modestly over the next three months
NEW DELHI: India’s retail inflation witnessed 7.34% rise in September, remaining well above the central bank’s tolerance level for the sixth consecutive month. The rise was mainly due to high food inflation.
Data released by the National Statistical Office on Monday showed that retail inflation grew 6.69% in August. Food inflation rose to 10.68% in September from 9.05% in the preceding month.
“The CPI inflation hardened beyond our expectations to an eye-watering 7.34% in September 2020, and crossed the 7% mark, driven primarily by a further uptick in food inflation, which remains in the grip of an upward spiral in vegetable prices, rising prices of eggs, meat and fish, and sticky prices of pulses and oilseeds," Aditi Nayar Principal Economist at ICRA Said.
On Friday, Reserve Bank of India (RBI) Governor Shaktikanta Das said that in September 2020 round of the central bank’s survey, households expects inflation to decline modestly over the next three months, indicative of hope that supply chains are mending. “Our assessment is that it (inflation) will remain elevated in the September print, but ease gradually towards the target over Q3 and Q4. Our analysis suggests that supply disruptions and associated margins/mark-ups are the major factors driving up inflation," Das said.
The RBI has cut policy rates by 115 basis points so far this year, to 4%. However, rising food inflation has pushed inflation higher than the upper band of the central bank’s 2%-6% target range, forcing the RBI to put a pause in its rate cutting cycle.