Mint Primer All about the inflation spike: how, why when
Subscribe to enjoy similar stories. The consumer price index (CPI)—or retail inflation—surged in October to 6.2%, breaching the Reserve Bank of India’s (RBI) upper tolerance limit. Mint looks at what caused this spike, its expected trajectory in the coming months and what it means for interest rates.
Despite the RBI governor Shaktikanta Das’s warning of higher inflation in October, the 6.2% reading, which marks a 14-month high, came as a surprise. It was 5.5% in September. For the first time in 13 months, the inflation breached the 6% mark—the higher end of the RBI’s inflation target.
It is the highest since August 2023, when inflation was 6.83%. This time around, the rural inflation at 6.7% is much higher than urban areas, which registered a price increase of 5.6%. Even though inflation is being tamed globally, India is one of those economies where pricing pressures still persist.
Read more: It is time India started indexing tax slabs and exemptions with inflation The main reason for this surge is food inflation, which touched a 15-month high of 10.9%. The sharp rise in the prices of vegetables, fruit, edible oil and pulses contributed to the jump in food inflation. Vegetable prices rose by 42% in October—marking a 57-month high.
The price of fruit rose by 8.4% and that of pulses by 7.4%. Excessive rainfall is being attributed for the lower supplies of fruit and vegetables in the market and the consequent price rise. Edible oil prices increased by 9.5% in October due to supply disruptions in Southeast Asia, which saw global edible oil prices rise by 27%.
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