Inflation at 7-month high on higher food, fuel prices


Retail inflation surged in October to a seven-month high, driven by a higher rate of increase in prices of food and fuel products. Data released by the Central Statistics Office (CSO) on Monday showed inflation, as measured by the consumer price index, rose an annual 3.6% in October, higher than previous month's 3.3%.

Retail inflation in the country picked up in October to a seven-month high, driven by faster rise in prices of food, fuel and housing, dampening chances of an interest rate cut by RBI next month.

Aditi Nayar Principal Economist at ICRA said "The staggered impact on the housing index of the CPI, of the revision in HRA of central government employees, is likely to push up housing inflation further over the coming year".

Inflation for the month of October stood at 4.20 per cent in 2016.

RBI said that inflation is expected to rise from its current level and range between 4.2-4.6% in the second half of this year, including the house rent allowance by the Centre. Recently, the Goods and Services Tax (GST) Council, even after pruning the 28 per cent slab, made a decision to keep the above items in the top slab.

As per the ministry's data, retail inflation on a YoY basis edged higher due to a rise in the prices of food items like vegetables, milk-based products, cereals, meat and fish.

The YoY CPI in urban areas ruled higher at 3.81 per cent, while in rural India it rose by 3.36 per cent. Crude prices have rallied, sending Brent crude to its highest since June 2015, a worry given that India imports most of its energy needs.