India’s CPI inflation Spiked to 4.62 percent in October 2019

India’s retail inflation spiked to 4.62 percent YoY in October compared to 3.99 percent in August 2019, driven by food prices as unpredictable rains disrupted supply of vegetables. The retail inflation surpassed the RBI’s medium-term target of 4 percent for the first time since July 2018.

Food price inflation, which amounts around half of the inflation basket, grew 7.89 percent in October compared to 5.11 percent in September. Within food and beverages category, vegetable prices rose highest 26.1 percent in October compared to 15.47 percent in September and pulses rose to 11.72 percent in October as compared 8.4 percent in September 2019.

Core Inflation, which excludes volatile items price such as food and energy, contracted to 3.44 percent in October compared to 4.02 percent in September 2019. The decline in the core inflation reflects the subdued demand in the economy.

Inflation by Area: Rural and Urban.

• Urban inflation ticked up 5.11 percent in October compared to 4.78 percent in September 2019, while food inflation jumped to 10.47 percent in October compared to 8.76 percent in September.
• Rural inflation rose to 4.29 percent in October compared to 3.24 percent in September 2019, driven by food inflation that grew to 6.42 percent in October compared to 3.22 percent in September 2019.

Despite ticked up in retail inflation, the Reserve Bank of India is likely to maintain accommodative stance on more concerned factors such as subdued core inflation, worst performance of industrial growth, weakness in consumer demand and slowing economic growth, at MPC meeting in December 2019.