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yesterday

India's October CPI Inflation Tops RBI's 6% Limit

Surging food prices pushed headline inflation above the central bank's tolerance band, signaling a higher chance of a repo-rate increase at the December Monetary Policy Committee meeting.

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Economists at CareEdge Ratings and Barclays India expect the RBI's Monetary Policy Committee to raise the rate by 25 basis points at its December meeting.
A salesman stands inside a retail store with a sign advertising a sale in New Delhi, India August 21, 2023. REUTERS/Adnan Abidi/File Photo
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Overview

  • Data released Thursday by the Ministry of Statistics showed CPI inflation rose to 6.09% in October, crossing the Reserve Bank of India’s 6% upper tolerance limit.
  • Food inflation climbed to 8.94% and steep year‑on‑year jumps in staples drove the rise, with onion up 116.22%, garlic 60.74%, ginger 48.32% and lemon 47.30%.
  • The RBI raised its repo rate to 5.50% on October 7, the October MPC minutes said further hikes may be needed, and economists widely expect at least a 25 basis‑point increase in December.
  • Price pressures have broadened beyond food, with 11 of 12 consumption categories recording higher inflation and rural inflation running hotter at 6.63% versus urban 5.41%, hitting households that spend more on food.
  • Supply and external risks — a weak monsoon and El Niño effects on crops, elevated commodity and crude prices, and a softer rupee — could keep inflation elevated and raise borrowing costs for consumers and businesses.