Retail inflation returned to double digits in October after a gap of seven months following a surge in vegetable prices and other food items, posing fresh worry for the government facing elections in key states and national polls next year.
Data released by the statistics office showed retail inflation as measured by the consumer price index rose an annual 10.09% in October, rising from the previous month’s 9.84%. It hit the double-digit mark both in urban and rural areas. The inflation rates for rural and urban areas for October 2013 were 10.11% and 10.20%.
Final inflation rates for rural and urban areas for September 2013 were 9.71% and 9.93%.
The key driver for the surge was vegetable prices which shot up 45.67% year-on-on year in October. Vegetable prices have remained a pressure point for several months, with onion, tomato and potato prices spiralling due to supply problems.
Eggs, fish and meat rose an annual 11.78% in October, fruits shot up 12.84% year-on-year. Cereal prices rose 12.05%. The overall food and beverage inflation in October stood at 12.56% year-on-year, highlighting the stress on the household budget as food is a vital chunk of monthly expenses.
Stubborn retail inflation along with pressure on wholesale prices makes it difficult for the Reserve Bank of India to cut interest rates.
Rupee fell to a near nine-week low on Tuesday, extending its losses for a fifth session, closing at 63.71/72 per dollar, compared with 63.24/25 on Monday.