Inflation Hits 14-month High of 6.21% in October

India's retail inflation rate accelerated to a 14-month high of 6.21 per cent in October 2024, surpassing the Reserve Bank of India's ( RBI ) upper tolerance limit of 6 per cent. This significant uptick, primarily driven by soaring food prices, has raised concerns about the impact on household budgets and the broader economy. According to data released by the National Statistical Office (NSO) on Tuesday, November 13, 2024, food inflation surged to 10.87 per cent in October, a substantial increase from 9.24 per cent in the previous month. This sharp rise was largely attributed to elevated prices of vegetables, fruits, and oils and fats.

While inflation rates for certain categories like pulses, eggs, sugar, and spices declined, the overall impact was subdued by the persistent upward pressure from food prices. The higher inflation rate could potentially erode consumer purchasing power, dampening demand and economic growth.

Food Inflation Soars
Food inflation accelerated to 10.87 per cent in October, up from 9.24 per cent in September. This surge was primarily due to higher prices of vegetables, fruits, and oils and fats. The rise in global edible oil prices and the recent hike in import duties on edible oils contributed to the increase in food inflation.
Moreover, inflation rates for cereals and meat and fish also inched higher. The sharp increase in the inflation rate for oils and fats, particularly, is a significant concern as it directly impacts household budgets.

Housing Costs Rise
Housing inflation also increased marginally to 2.81 per cent in October from 2.78 per cent in September. This, coupled with rising food and fuel prices, is likely to further strain household finances.

Services Inflation Picks Up
Services inflation, as measured by the miscellaneous category, increased to 4.32 per cent in October from 4.05 per cent in September. The personal care and effects segment recorded a significant jump in inflation, reaching 10.99 per cent in October.

Government's Response
The government may need to implement measures to alleviate inflationary pressures, such as increasing domestic production, improving supply chain efficiency, and taking steps to moderate global commodity prices. Additionally, targeted interventions to support vulnerable sections of society may be required to mitigate the adverse impact of rising prices.
As inflation continues to pose a challenge, policymakers will need to carefully assess the situation and adopt appropriate measures to safeguard macroeconomic stability and protect the interests of consumers.