India’s retail inflation hits 16-month high of 4.62%

India’s retail inflation hit 4.62 percent in October breaching the Reserve Bank of India’s (RBI) medium-term target of 4 percent for the first time in 16 months.

This is the highest level since June 2018 on the back of rising vegetable prices, government data showed.

Inflation – gauged by the Consumer Price Index (CPI) – had quickened to 3.99 percent in September. The inflation in the food basket spiked to 7.89 percent in October 2019 as against 5.11 percent the preceding month.

Prices of most vegetables climbed last month as monsoon downpours delayed harvests and disrupted supplies. That was despite the government’s ban on onion exports.

39 economists who took part in a poll conducted by news agency Reuters between November 4 and 9 had forecast annual consumer price inflation rose to 4.25 percent in October.

The pickup in consumer inflation leaves little room for the central bank to further ease the monetary policy. The RBI has so far this year lowered the repo rate – or the key interest rate at which it lends short-term funds to commercial banks – by 135 points (1.35 percentage points) to 5.15 percent.

In separate data released on Monday, the country’s economic slowdown deepened as the industrial production measured by the Index of Industrial Production (IIP) contracted for second month in a row in September.

Index of industrial production contracted by 4.3 per cent in September, its fastest pace of fall in over six years, official data showed.