Retail inflation in October 2024: The Consumer Price Index-based inflation rate rose to 6.21 percent in October, which was 5.49 percent in the previous month i.e. September. According to official data released on Tuesday, retail inflation has increased mainly due to rising prices of food items. In this way, the retail inflation rate has gone above the satisfactory level of 6 percent of the Reserve Bank of India ( RBI ). In the same month last year, the Consumer Price Index ( CPI ) based inflation rate was 4.87 percent.

Data from the National Statistical Office ( NSO ) shows that food inflation rose to 10.87 percent in October from 9.24 percent in September and 6.61 percent in October last year. The RBI kept the policy rate repo unchanged at 6.5 percent last month. The government has given the central bank the responsibility of keeping the inflation rate at four percent (2 percent variation). Retail inflation has been running below the RBI's satisfactory level of 6 percent since September last year. It was at 6.83 percent in August 2023.

The NSO said that the all-India Consumer Price Index-based inflation rate for October, 2024 is 6.21 percent. The inflation rate for rural and urban areas is 6.68 percent and 5.62 percent, respectively. The NSO data shows that the sub-groups of 'pulses and its products', eggs, 'sugar and confectionery', and spices witnessed a significant decline in inflation during October, 2024. The NSO said that the high food inflation in October, 2024 is mainly due to the increase in the inflation rate of vegetables, fruits and oils, and fatty items.

ICRA Chief Economist Aditi Nair said that CPI inflation rose alarmingly to a 14-month high in October 2024, which is higher than the Monetary Policy Committee's (MPC) medium-term target range of 4 percent (plus or minus two percent). She said that the gradual increase in inflation was mainly due to the food and beverages segment, followed by a mild increase in core commodities.

Nair said that retail inflation has crossed the satisfactory level of 6 percent and is expected to be at least 0.6-0.7 percent higher than the MPC's estimate for the third quarter (October-December) of the current financial year (2024-25). This has ended the possibility of a repo rate cut in the upcoming MPC meeting. He said that we estimate that the rate cut cycle of 0.5 percent may start in February 2025 or thereafter.