Inflation touched 4.62, according to the data released by the statistics office on Tuesday, compared to 3.99% in the month of September. Inflation, as measured by the Consumer Price Index (CPI), was 3.38% in October last year.
Consumer Food price inflation, which amounts to half of the inflation basket, increased to 7.89 % compared to 5.1% in the previous month. Core inflation which excludes energy and food items was mapped at 3.5 % in comparison to 4% a month ago. Meanwhile, pulses inflation shot up to 11.72% from 8.4% MoM and vegetable inflation jumped to 26% from 11.4% MoM
Food inflation has picked up pace in the past few months growing from 1.83% in May this year.
Clothing and footwear inflation was mapped at 1.64% vs 0.96% MoM.
Inflation Rate in India averaged 5.98 percent from 2012 until 2019, reaching an all time high of 12.17 percent in November of 2013 and a record low of 1.54 percent in June of 2017.
The RBI has retained its consumer price inflation forecast for the second half of 2019-20 at 3.5-3.7%. In the last Monetary Policy Report (MPR), RBI had said that the upside risks to inflation include; volatility in international and domestic financial markets from trade tensions, Brexit and supply disruptions in the global crude oil market due to geopolitical tensions.
The RBI has cut rates by a total of 135 basis points this year to 5.15%. The Uptick in headline inflation and its subsequent breach of the Central bank’s medium-term target might push RBI to put the breaks on its rate cut cycle in the next MPC meet that is scheduled for December 5.
India’s factory output too contracted 4.3% in September, lowest in eight years. Indicating that the slowdown, which has pushed the government to announce a slew of reforms, is showing no signs of fading away despite favorable policies and a corporate tax cut.
The central bank has pared its FY20 annual growth forecast to 6.1% from 6.8% estimated earlier. The economy grew 6.8% in FY19.