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Retail inflation rises to 3.99% in September on costlier food items

Vegetables inflation stood at 15.4 percent in September against 6.90 percent in August.

October 14, 2019 / 06:54 PM IST
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India's retail inflation rate in September grew 3.99 percent, almost breaching Reserve Bank of India's (RBI) target level of 4 percent, latest price data released by the Central Statistics Office (CSO) on October 14 showed.

Retail inflation for August stood at 3.21 percent.

Food prices, which is a gauge to measure changes in kitchen budgets, grew 5.11 percent in September as against 2.99 percent in August. Inflation rate in cereals and products stood at 1.66 percent in September against 1.3 percent in August while vegetables inflation stood at 15.4 percent in September against 6.90 percent in August.

Pulses and products recorded an inflation of 8.4 percent in September against 6.94 percent in August.

"Vegetables and pulses contributed 76.4 percent of the increase in retail inflation in September over August.  Food inflation would continue to rise at least till March 2020 mainly due to base effect," Sunil Kumar Sinha, Principal Economist, India Ratings & Research, said.


Core (non-food, non-energy) inflation for the month of September came in at 4.02 percent as against 4.25 percent in August.

"Core inflation for September 2019 is 26 month low," Sinha said.

India is in the throes of an economic slowdown. GDP grew 5 percent in April-June 2019, buffeted by weak household spending and muted corporate investment.

On August 23, Finance Minister Nirmala Sitharaman announced a slew of measures like eased foreign investment rules, concessions on vehicle purchases and encouraged banks to make loans cheaper to spur growth from a five-year low.

To combat the slowdown, she announced a cut in corporate tax rates in September, bringing it down to 22 percent from 30 percent for existing companies, and to 15 percent from 25 percent for new manufacturing companies.

To boost growth, RBI in October again announced a 25 basis point cut in the repo rate. This was the fifth consecutive rate cut by the RBI in addition to the cumulative 110 basis points rate cut announced by the RBI so far.

The national income data have reinforced deceleration signs that were emanating from a slew of shop-end data, such as car and consumer goods sales, often seen as proxy indicators to gauge trends in household spending.

It has been widely reported that automakers like Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Ashok Leyland and Honda Motorcycle & Scooter India have temporarily closed plants in the past few months.  Initial reports for July suggest that the passenger car sales have slipped by over 29 percent.
Moneycontrol News
first published: Oct 14, 2019 05:39 pm

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