Retail inflation jumps to 7-month high of 3.6% in October

The GST Council’s decision to cut tax rates on 177 items from 28% to 18% is expected to partially ease inflation going ahead

The GST Council’s decision to cut tax rates on 177 items from 28% to 18% is expected to partially ease inflation going ahead

Assocham Secretary General D.S. Rawat said the rise in wholesale price index (WPI) numbers may have corresponding upward impact on consumer price index (CPI) which may limit the possibility of rate cut by the Reserve Bank of India (RBI), which has already shown concern for increase in inflation in the future.

Pan, tobacco and intoxicants saw high inflation and settled at 6.91 per cent. Clothing and footwear (4.76), housing (6.68), and fuel and light (6.36) were costlier on sequential basis.

Meanwhile, Jacob Deppe, head of trading at online trading platform Infinox, suggested the latest inflation data is likely to ease the pressure for another interest rate rise in the next few months. The main reason was vegetable prices, with inflation in these up from 3.92 per cent to 7.4 per cent. Onions and tomatoes appear the main causes, though the government did not issue the details.

The increase was led by firming up of food prices with vegetables segment remaining a key stress point at this juncture, said Pankaj Patel, President, FICCI.

Food price inflation (combined) stood at 1.90 per cent in October against 1.25 per cent in September and 3.32 per cent in October 2016.

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Analysts' consensus forecast had been for a slight rise in CPI to 3.1 percent.

According to the data released by the Ministry of Commerce and Industry here on Tuesday, the index for this major group rose by 2 percent to 133.4 (provisional) from 130.8 (provisional) for the previous month. Cereals and products also saw 3.68 per cent inflation. "However, cut in excise duty announced by the government tempered the price increase in fuel".

Kate Smith, head of pensions at Aegon, warned people are facing a "triple whammy" of squeezes in their purse: high inflation, little sign of wage growth and rising interest rates.

Decision to lower GST (goods and services tax) rates on over 200 items could help pull down retail inflation by 20 basis points from the current levels driven by lower food and beverage prices, says a report.

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