Inflation Update: India’s CPI Jumps to 5.49%, Food Prices Surge by 9.24% in September

CPI Increase

India’s Consumer Price Index (CPI) rose by 5.49% in September, up from 3.65% in August, and higher than the expected 5%. This marks the highest retail inflation rate in nine months.

Consumer Price Index tracks retail inflation by looking at how prices change for common consumer goods and services. It is based on a fixed list of items like food, housing, clothing, transportation, electronics, healthcare, and education.

Food Inflation

Food inflation increased significantly, with the CPI showing a year-on-year rise of 9.24% in September. Vegetables were the main reason for this surge.

Rural and Urban Inflation

CPI inflation in rural areas reached 5.87%, compared to 4.16% in August. In urban areas, it was 5.05%, up from 3.14% the previous month.

Core Inflation

Core inflation, which excludes food and fuel prices, was recorded at 3.5%, slightly higher than 3.4% in the previous month.

Wholesale Inflation

Wholesale inflation also rose, increasing to 1.84% in September from 1.31% in August.

Key Highlights (Year-On-Year):

Vegetable prices increased by 35.99%, up from 10.7% last year.

Cereal prices went up by 6.84%, after a rise of 7.31% in August.

Inflation for meat and fish was at 2.66%, compared to 4.30% the previous month.

Egg prices increased by 6.31%, down from a 7.14% rise last month.

Milk and milk product prices rose by 3.03%, similar to the 3% increase last month.

Pulses saw a 9.81% increase after rising by 13.6% last month.

Clothing and footwear inflation remained steady at 2.71%, the same as in August.

Reserve Bank of India Policy

The Reserve Bank of India (RBI) decided to keep the policy interest rate at 6.5% for the tenth time in a row, shifting its stance to neutral. There was one dissenting vote for a rate cut from a new committee member.

Future Rate Cuts

Experts predict that the RBI may implement its first rate cut since the pandemic in December.

Food Prices

In September, the price of a Veg Thali increased by 11% to ₹31.30, with onions up by 53%, potatoes by 50%, and tomatoes by 18%. Meanwhile, the price of a Non-Veg Thali decreased by 2% to ₹59.30, mainly due to a 13% drop in chicken prices, which constitute half of its cost.

🚨 In September, Veg Thali prices increased 11% YoY to ₹31.30, with onion prices up 53%, potatoes up 50%, and tomatoes up 18%. Conversely, Non-Veg Thali prices decreased 2% to ₹59.30, driven by a 13% drop in chicken prices, which make up 50% of its cost.

Source: Crisil

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