Consumer price inflation at a 7-month high of 3.58% in October

Consumer price inflation at a 7-month high of 3.58% in October

India's retail inflation picked up in October to a seven-month high, driven by faster rises in prices of food and fuel products, dampening chances of an interest rate cut by the central bank next month.

Assocham Secretary General D.S. Rawat said the rise in wholesale price index (WPI) numbers may have corresponding upward impact on consumer price index (CPI) which may limit the possibility of rate cut by the Reserve Bank of India (RBI), which has already shown concern for increase in inflation in the future.

The CSO data says the October inflation for the food basket increased to 1.9 per cent.

The data on a YoY basis showed that vegetables in October became costly by 7.47 per cent, while prices of milk-based products rose by 4.30 per cent.

A study of government data suggests that the retail inflation would have been much higher if the price of pulses had not fallen by 23 per cent on account of bumper crop this year. It was lower by 22.51 per cent in September.

Sub-category of food and beverages during the month under consideration recorded a rise of 2.26 per cent over the same period past year.

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Consumer price inflation for the urban areas stood at 3.81 per cent in October against 3.44 per cent in September and 3.44 per cent in October 2016.

Kate Smith, head of pensions at Aegon, warned people are facing a "triple whammy" of squeezes in their purse: high inflation, little sign of wage growth and rising interest rates.

Separately on Tuesday, data from research group Kantar showed that United Kingdom grocery price inflation for the quarter ending November 5 stood at 3.4 percent, the highest level in four years.

The price rise in services appear to have been impacted by the implementation of GST as most services are taxed at 18 per cent compared to 14.5 per cent under the previous service tax regime.

RBI's Monetary Policy Committee (MPC) has a mid-term inflation target of 4 per cent.

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