Retail inflation spikes to 7.34% in September from 6.69% in August – Times of India

NEW DELHI: Retail inflation based on consumer price index (CPI) accelerated to 7.34 per cent in the month of September as against 6.69 per cent in August mainly on account of rising food prices, government data released on Monday showed.
Inflation figures in September remained above the Reserve Bank of India’s (RBI’s) comfort level for the sixth consecutive month. The monetary policy committee (MPC) has been tasked by the government to tame retail inflation based on consumer price index (CPI) at 4 per cent (+,-2 per cent).
Although the government has eased some lockdown restrictions to help revive the economy, supply chain disruptions have shown little sign of abating as the virus continues to spread rapidly in India.
Persistent high prices have hurt the recession-stricken economy, which contracted a record 23.9 per cent in April-June despite the RBI cutting its key repo rate by a cumulative 115 basis points since the pandemic started.
The RBI mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
In its monetary policy meet held last week, the RBI decided to keep the key policy repo rate unchanged at 4 per cent. RBI governor Shaktikanta Das said retail inflation is expected to remain close to the targeted level by the last quarter of the current fiscal year. However, it is likely to stay above the tolerance level at 6.8 per cent for the quarter ended September 2020, he added.
Das, in his statement, said that some of this optimism is being reflected in people’s expectations. In the September 2020 round of the RBI’s survey, households expect inflation to decline modestly over the next three months, indicative of hope that supply chains are mending.
“Our projections indicate that inflation would ease closer to the target by Q4 of 2020-21,” he said.
In a separate set of data released by the government, industrial production for the month of August declined by 8 per cent.
(With agency inputs)