The rate of retail inflation, as measured by the Consumer Price Index (CPI) breached the Reserve Bank of India’s (RBI’s) medium-term target of 4% in October, for the first time in 15 months, on the back of higher food prices.
The CPI-inflation rate had stood at 3.99% in September and 3.38% in October 2018.
Inflation in the food basket spiked to 7.89% in October 2019, against 5.11% the previous month. The RBI mainly factors in the CPI-based inflation to arrive at its bi-monthly monetary policy. The RBI has been asked to keep the retail inflation at around 4%.
Prices of most vegetables climbed in October as monsoon downpours delayed harvests and disrupted supplies.
Worries on the economic slowdown have already prompted the RBI to cut interest rates by a total of 135 basis points this year.
September industrial output contracted 4.3%, government data showed on Monday following a decline of 1.4% in August.
Three analysts said October core inflation was at 3.44-3.60%, against 4-4.02% in September.