Wed Oct 09 06:22:38 UTC 2024: ## Food Price Pressures Push Inflation Back Up in September

**New Delhi, October 4, 2024** – India’s retail inflation is set to rise again in September, climbing back to 5% after two consecutive months of below-4% levels. This surge is being attributed to continued food price pressures, particularly in vegetables, as well as a revival in rural demand.

Analysts, including the Bank of Baroda and DBS Bank, predict the consumer price index (CPI) to reach 5.1% in September, with potential for further upside risks. While seasonal factors like the arrival of new crops typically lead to vegetable price corrections in the second half of the year, this year has been different, with disruptions to supply chains resulting in price shocks for items like tomatoes and onions.

“Core inflation, which excludes volatile food and fuel prices, is also expected to rise due to the revival of rural demand, ongoing festive season demand, and elevated gold prices,” said Dipanwita Mazumdar, Economist at Bank of Baroda.

The Crisil ‘Roti Rice Plate’ report confirms this upward trend in vegetable prices, highlighting a 11% increase in the cost of home-cooked vegetable thalis year-on-year. Onion, potato, and tomato prices have risen sharply, driven by factors like lower arrivals and heavy rainfall impacting production.

Despite these pressures, the RBI is expected to maintain the repo rate at 6.5% for the tenth consecutive meeting. While the central bank remains watchful of inflation and its potential spillover effects on core inflation, recent statements by Governor Shaktikanta Das suggest a more balanced outlook on food price volatility.

Official CPI data for September is due to be released on October 14.

Read More