Due to the continuous rise in the prices of food items, there is a possibility of a sharp rise in retail inflation during October.
Experts have predicted it to be above six percent, which will be its highest level in 14 months. The main reason for this is the skyrocketing prices of food items, especially vegetables and edible oils.
Rising inflation can also affect the monthly installment, because RBI can postpone the decision to cut the repo rate for a long time. Retail inflation figures will be released on Tuesday.
According to the report of Union Bank of India, retail inflation based on Consumer Price Index (CPI) may increase to the level of 6.15 percent in October.
This will be its 14-month high after August 2023. At that time, retail inflation was 6.83 percent, whereas in July 2023, it increased to a 15-month high of 7.44 percent.
The wait for relief on EMI will be long
Experts say that rising inflation may also affect the monthly installment because RBI may postpone the decision to cut the repo rate for a long time.
RBI Governor Shaktikanta Das has already clarified that there will be no cut in the repo rate in the monetary review meeting to be held in December.
If sharp fluctuations in inflation continue, people may have to wait till the second quarter of the next financial year for relief in EMIs.
It is noteworthy that RBI has kept the repo rate unchanged at 6.5 percent from February 2023.
The record of nine months was broken in September
Due to rising food prices, retail inflation also rose to a nine-month high of 5.49 per cent in September, which was much higher than forecast, while it stood at 3.65 per cent in August. During this period, the inflation rate of food items also increased from 5.66 percent in August to 9.24 percent in September. The inflation rate of vegetables had increased the most and reached 36 percent, whereas in August it was 10.71 percent.
Tomato prices increased more than double
According to the report, after September there has been a rise in the prices of food items in October also. The main reasons for this are vegetables and edible oils.
Especially the prices of tomatoes have increased more than double. According to the recent report of CRISIL, tomato prices have increased by 120.68 percent to Rs 64 per kg in October from Rs 29 in the same period a year ago.
At the same time, onion prices have increased by 46 percent on an annual basis. An increase of 51 percent has been recorded in the prices of potatoes.
Prices of edible oils also increased
Apart from this, the central government has increased the import duty on edible oils by 20%, which increased inflation. The inflation rate of edible oils was below zero (-0.86%) in August, which increased sharply to 2.47 percent in September.
RBI had also given indications
Recently, RBI Governor Shaktikanta Das had also hinted at a rise in inflation due to the rise in food prices. At present, retail inflation remains well above the range set by RBI.
According to experts, if it goes above six percent in October, it will also cross the tolerance range of RBI.
The government has given the responsibility to RBI to keep retail inflation within the range of four percent with a variation of two percent.
Weather continues to hit inflation
1. Extreme heat and unusual rain
2. Huge damage to crops in many states
3. Low production of major vegetables including potatoes
4. Impact on production of pulses and fruits also
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