Oct retail inflation at 3.58%, highest in FY18 so far

Gladys Abbott
November 15, 2017

The YoY CPI in urban areas ruled higher at 3.81 per cent, while in rural India it rose by 3.36 per cent.

India's annual wholesale price inflation last month increased to 3.59 percent from a year earlier from a provisional 2.60 percent in September.

Assocham Secretary General D.S. Rawat said the rise in wholesale price index (WPI) numbers may have corresponding upward impact on consumer price index (CPI) which may limit the possibility of rate cut by the Reserve Bank of India (RBI), which has already shown concern for increase in inflation in the future.

The increase was led by firming up of food prices with vegetables segment remaining a key stress point at this juncture, said Pankaj Patel, President, FICCI. The GST Council's recent decision to cut the rates on around 200 items is likely to further dampen the rate of price rise of these items.

The price rise in services appear to have been impacted by the implementation of GST as most services are taxed at 18 per cent compared to 14.5 per cent under the previous service tax regime.

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Higher inflation was also noted in protein rich items like oils and fats, eggs, and milk (and its products). However, fruits were comparably cheaper in October on a sequential basis.

Food inflation rose 1.9% in October, higher than September's 1.3%, while housing inflation touched a 40-month high of 6.7% due to revision of rent allowance for employees of the central government.

"Some abatement in prices of pulses, potato and sugar through policy measures is very much appreciated". It was lower by 22.51 per cent in September. Crucial services such as education, healthcare, personal care, etc have seen an inflation of 3.48 per cent.

"We're already seeing slower rises in the costs of raw materials and prices at the factory gate, which could be a sign the inflationary spike is close to an end", said Ben Brettell, senior economist at stockbrokers Hargreaves Lansdown.

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