Vegetable prices surge 42 per cent, retail inflation crosses RBI's threshold

Retail inflation in India spiked to 6.21 percent in October 2024, surpassing the Reserve Bank of India’s (RBI) upper tolerance limit for inflation. Rising food prices largely drove this increase.

This marks a 14-month high for retail inflation, which had previously climbed to 5.5 per cent in September due to a significant surge in food costs. The increase has raised concerns over cost-of-living pressures as food inflation soared to 10.87 per cent, a sharp rise from 5.6 per cent in earlier months.

Breaking down inflation geographically, rural areas saw a higher rate of 6.68 per cent, while urban areas experienced a rate of 5.62 per cent. The latest All India Consumer Food Price Index (CFPI) revealed food inflation rates of 10.69 per cent in rural regions and 11.09 per cent in urban zones for October, showing a sharp uptick compared to the previous year’s 6.61 per cent for the same period.

Vegetable prices, in particular, witnessed a dramatic increase of 42.18 per cent, with urban areas seeing a slightly higher inflation of 42.63 per cent compared to 41.94 per cent in rural areas. Other significant contributors to inflation included oils and fats at 9.51 per cent and fruits at 8.43 per cent, while spices were the only food category to record a price decline of 7.01 per cent.

The RBI, which maintained the repo rate at 6.5 per cent in its recent review, targets a 4 per cent inflation rate, allowing for a 2 per cent variance. With current inflation levels exceeding this range, there is heightened speculation over potential policy adjustments in the coming months.

Chhattisgarh led the states with the highest inflation rate at 8.84 per cent, followed by Bihar at 7.83 per cent and Odisha at 7.51 per cent. In contrast, Delhi recorded the lowest inflation rate at 4.01 per cent, with West Bengal and Maharashtra following at 4.63 per cent and 5.38 per cent, respectively.

As inflation continues to challenge the economy, particularly through soaring food prices, policymakers may face increasing pressure to reassess strategies to curb price hikes, especially as they impact essential goods.