Retail inflation rose from 3.65% in August to 5.49% in Sept

CPI inflation: Retail inflation in the month of September came in at 5.49 per cent largely in line with expectations of the economists, the government data showed on Monday.  The retail inflation in September is the highest in the last 9 months.

The retail inflation has gone up from 3.65 per cent  in August to 5.49 per cent in September owing to the spike in vegetable prices and base effect. This is after June that retail inflation has overshot RBI ’s medium term target of 4 per cent.

The vegetable inflation has come in at 35.55 per cent in September against 10.71 per cent in August.

The Reuters poll for the month of September showed that inflation is expected to go to 5.04 per cent . Similarly, core inflation which strips volatile components such as food and fuel was projected to be around 3.50 per cent in September. 
 
“Headline CPI inflation for Sept'24 has risen more than expected to 5.49 per cent from 3.65 per cent in Aug'24, largely driven by food inflation which rose to 9.24 per cent from 5.66 per cent in the previous month. One of the key reasons for the rise, however, is the base factor as inflation had fallen sharply in Aug'23,"Suman Chowdhury, Executive Director & Chief Economist, Acuité Ratings said.

According to Chowdhury, Vegetable prices rose further by 3.49 per cent while edible oils increased by 2.91 per cent on a MoM basis. Excess rainfall in some parts of the country has been a key factor in driving up food inflation in Sep'24.

“Nevertheless, the average CPI inflation in Q2FY25 stands at 4.24 per cent which is largely in line with the RBI estimates. Needless to say, the food inflation figure will play a critical role in shaping the inflation print in terms of the extent of the seasonal decline in the current quarter after the kharif harvest.” Chowdhury opined.  “We expect the headline inflation to average at around 4.6% in the third quarter of the year which may enable RBI to go for a rate cut amidst some signs of a moderation in economic activity visible in Q2,” he added.