New Delhi. Due to rise in prices of vegetables, retail inflation increased to a nine-month high of 5.49 percent in the month of September. This information was given in the official figures released on Monday. Inflation based on Consumer Price Index was 3.65 percent in August last month while it was 5.02 percent in September last year. Earlier in December, 2023, it had reached the highest level of 5.69 percent.
According to the data of the National Statistical Office (NSO), inflation in food items jumped to 9.24 percent in the month of September, which was 5.66 percent in the previous month in August and 6.62 percent in the same month a year ago. NSO said, “We estimate that the increase in inflation in the month of September is due to higher comparative base effect and weather conditions.” According to data released earlier in the day, wholesale inflation increased to 1.84 percent in September. Wholesale inflation increased due to increase in cost of food items, especially vegetables.
Inflation based on Wholesale Price Index (WPI) was 1.31 percent in August. There was a decline of 0.07 percent in September last year. The Reserve Bank of India has the responsibility of keeping retail inflation at four percent with a variation of two percent. The central bank had not made any changes in the key policy rate repo in the monetary policy review presented last week with the aim of bringing inflation in line with the target.
On an annual basis, inflation in vegetables stood at around 36 percent in September. Whereas in case of pulses and its products it was 9.81 percent. During this period fruits also became expensive. According to the data, however, spice inflation declined on an annual basis in September. ICRA LTD. Chief Economist Aditi Nair said, “The main reason for the increase in food inflation in September as compared to August is the rise in the prices of vegetables. “It reached a 14-month high of 36 percent, which was 10.7 percent last month.”
He said, “If this was removed, inflation in food items would have been at a 59-month low of 3.9 percent in September this year, which was 4.3 percent in August.” While presenting the bi-monthly monetary policy review on October 9, RBI Governor Shaktikanta Das had said that due to unfavorable comparative base and rising food prices, a good increase in inflation may be seen in the month of September. The reason for the rise in food inflation is, among other things, the reduction in the production of onion, tomato and gram dal in 2023-24.
Sujan Hazra, chief economist and executive director of Anand Rathi Shares and Stock Brokers, said that the increase in retail inflation in the month of September is higher than expected. The main reason for this increase is the rise in the prices of vegetables. He said, “With a normal monsoon this year, we estimate that the supply in the market will be better in the coming days and the inflation of food items will moderate. However, headline inflation may remain at 4.5 to five percent in the next one-two months, which is higher than the RBI’s current target of four percent. “With this, the central bank can keep the repo rate unchanged this year….” According to NSO data, the inflation rate at the national level is 5.49 percent while in rural and urban areas it is 5.87 percent and 5.05 percent respectively. Inflation was highest in Bihar at 7.5 percent while it was lowest in Delhi at 3.67 percent. Inflation of food items was high in urban areas.