India’s Retail Inflation In October Jumps To Highest Since May 2014
Inflation has been increasing for the past nine months. The figures did not come due to the full ban in April and May. Statistics have been available from markets since June. Since then inflation has been steadily increasing. The reason for this is the rise in food inflation. The supply of vegetables as well as eggs, fish and other protein foods has been affected across the country. Talking about October only, eggs have become costlier by 21 percent and meat and fish by 18 percent.
The central government has released the inflation data for October, according to which the inflation rate was 7.61 percent. This is the highest ever in the last six years. Earlier in May 2014, the inflation rate was 8.33 percent, which also became a major reason for the Manmohan Singh-led UPA government to be out of power. The retail inflation rate is calculated based on the Consumer Price Index (CPI).
According to the October index, food inflation rose at a rate of 10.16 percent. Food inflation accounts for 45.8 percent of inflation. In October, onion-potato prices were skyrocketing in many cities. Onion had reached a rate of Rs 100 per kg. On the other hand, vegetables were 22 percent more expensive last month than in October-2019. This causes food inflation and Retail inflation increased. The opposite is the case worldwide.
In China, inflation in October was the lowest in 11 years – 0.5 percent. The reason for this is the African swine fever due to which people stopped eating pig and its population has increased due to the fall in prices. Inflation is also expected to remain down in November.
Inflation in the US was 1.3 percent in October. Inflation in Britain and Japan also remained around 0.5 percent. Actually, there is a danger of recession and deflation in these countries. Just as inflation is not good, inflation is also not considered good for the economy. There is a fear of a falling growth rate.
The Reserve Bank has the responsibility of holding the inflation rate at 4 percent with an increase of two percent. October was the seventh consecutive month when inflation remained above six percent. The Reserve Bank had not reduced interest rates in the last monetary review.
If inflation continues to rise in this manner, it is unlikely that interest rates will fall. According to Union Bank Managing Director Rajkiran Rai, interest rates are unlikely to fall until inflation comes down. There will be some relief in December and after a good harvest, inflation seems likely to come down in February.
Recently, the Reserve Bank in its report on the economy said that even by setting storage limits on onions, increasing import of potato and onion, reducing import duty on grains, prices of food items have not come down. On the other hand, according to Economic Affairs Secretary Tarun Bajaj, the increased prices of food items are temporary.
It is not going to last long. Prices will start decreasing once the supply of essential commodities becomes normal. For the 7th consecutive month, retail inflation has been above the Reserve Bank’s target. Vegetables became the most expensive by 22.51 percent.