Saturday, 18 November, 2017

Food and fuel prices push India's retail inflation in October

CPI Inflation for October 2017 today here's what analysts expect Shoppers rush at a supermarket after Goods and Services Tax roll out in New Delhi
Juana Turner | 15 November, 2017, 01:04

Wholesale inflation rose to six month high of 3.59 percent in October as prices of food articles, led by onion and vegetables, witnessed a sharp rise.

According to government data released on Monday, the annual consumer inflation in October increased to 3.58 per cent from a year ago. "There is, however, a low likelihood of a rate cut by the RBI in the immediate term", said Aditi Nayar, an economist at Icra adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.

The rate of price rise in the vegetable segment nearly doubled to 7.47 per cent against 3.92 per cent in September.

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.

The absence of another rate rise in the coming months would ease the pressure on households, which are seeing wages growth failing to keep pace with high inflation.

Prices of protein-rich items like eggs and milk (and its products) also increased. However, fruits were comparably cheaper in October on sequential basis.

Prices of pulses continued to decline by as much as 23.13 per cent. It was (-) 22.51 per cent in September.

The Retail Price Index (RPI), a separate measure of inflation, was 4% last month, up from 3.9% in September.

The BoE tightened borrowing costs to 0.50 percent from a record-low of 0.25 percent, with Britain's inflation far above the central bank's 2.0-percent target rate.

Wholesale food prices in October rose 3.23 percent year-on-year, compared with a 1.99 percent rise a month earlier, the data showed.

Commenting on the Reserve Bank of India's (RBI) expected reaction to the inflation numbers released before its monetary policy review meet on December 6, Jaikishan J. Parmar, Research Analyst at Angel Broking, said: "Firstly, the CPI inflation is still well within the RBI comfort zone of 4 per cent".


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