India's retail inflation climbs to 5.49%, highest in CY24; WPI inflation also rises

Wholesale inflation, reflecting factory gate prices, also accelerated during the same period.

According to the National Statistical Office (NSO), the consumer price index (CPI) jumped to 5.49 percent in September, up from 3.65 percent in August.

The last time inflation was this high was in December 2023, at 5.69 percent.

The Ministry of Commerce and Industry reported an increase in wholesale price index (WPI)-based inflation, which rose to 1.84 percent in September from 1.31 percent in August.

This spike was mainly driven by food price inflation, which surged to 11.53 percent from 3.11 percent the previous month.

Retail food inflation saw a significant rise to 9.2 percent in September, compared to 5.66 percent in August, with steep increases in the prices of fruits (up 7.65 percent) and vegetables (soaring 35.99 percent).

However, price growth for cereals (6.84 percent) and protein-rich foods like eggs (6.31 percent) and meat & fish (2.66 percent) slowed somewhat.

Despite the rise, retail inflation remains within the Reserve Bank of India’s (RBI) target range of 2 percent to 6 percent.

Last week, the RBI’s monetary policy committee (MPC) maintained a neutral stance, holding the repo rate steady at 6.5 percent for the 10th consecutive meeting.

The RBI also kept its retail inflation forecast for FY25 at 4.5 percent.

RBI Governor Shaktikanta Das had previously predicted a sharp increase in September's retail inflation, attributing it to unfavorable base effects and food price pressures, particularly due to shortages in the production of onions, potatoes, and chana dal during FY24.

However, Das projected inflation to moderate in the final quarter of the financial year, supported by a good kharif harvest, ample buffer stocks of cereals, and a potentially strong rabi crop.

He cautioned that unforeseen weather events and escalating geopolitical conflicts posed upside risks to inflation.

Core retail inflation, which excludes food and fuel, edged up to around 3.5 percent in September.

Price increases were observed in categories such as clothing and footwear (2.71 percent), education (3.79 percent), health (4.09 percent), and personal care (9 percent).

Meanwhile, fuel prices continued to decline, down 1.4 percent.

On the wholesale front, inflation in manufactured products, which make up 64.2 percent of the WPI index, slowed to 1 percent from 1.22 percent in August.

This deceleration was driven by lower price increases for textiles, wood products, chemicals, pharmaceuticals, and rubber goods.

Factory gate prices for fuel and power also fell, with diesel prices dropping 5.33 percent, petrol down 7.47 percent, and cooking gas prices easing to a 13.18 percent increase.