India's retail inflation remained above the central bank's target in October, driven by price rises in vegetables, fruits and oils and fats. The Consumer Price Index-based inflation rose to 6.21% last month, compared to 5.49% in September, according to data by the Ministry of Statistics and Programme Implementation on Tuesday.
A Bloomberg poll of economists had pegged the median inflation estimate at 5.9% for October.
The Reserve Bank of India targets retail inflation at 4%, with a tolerance level of two percentage points on either side.
On a sequential basis, inflation rose by 1.34% in October.
The jump in retail inflation was led by vegetables, with prices soaring 42.18% year-on-year compared to 35.99% in September.
Urban inflation rose from 4.62% to 5.62%, while in rural areas, prices rose by 6.68% compared to 5.12% in the same month last year.
Core inflation-that excludes volatile food and fuel, rose to an 10-month high of 3.7% in October compared to 3.5% in September, according to Bloomberg.
Key Internals (Year-On-Year)
Cereal prices rose by 6.94% after rising by 6.84% in September.
Inflation for meat and fish was 3.17% compared to a rise of 2.66% in the previous month.
Inflation in eggs rose 4.87% after rising by 6.31% last month.
Inflation rate for milk and milk products was 2.97%, compared to 3.03% in the previous month.
Inflation in pulses rose 7.43% after rising by 9.81% last month.
Clothing and footwear inflation rose to 2.7%, same as in September.
Housing prices went up by 2.81%, compared to 2.72% last month.
Impact Of Pricey Vegetables
Vivek Kumar, economist at QuantEco Research, said there was anticipation of core inflation moving towards the 4% level before the end of the current financial year.
He noted the price pressure in CPI comes from two main baskets in the food space: vegetables and oilseeds. Prices of widely consumed staples like onion, tomato and potato drove the vegetable component higher, while an import tax hike in oilseeds had a spillover effect on prices.
"The persistence of aberration makes one cautious and we hope winter seasonality, which typically starts to set in from November, will play a crucial role in bringing down vegetable prices," he said.
Moreover, a good kharif output this year will soon hit the open market and tame prices, he said.
On what the RBI does from hereon, Kumar sees no change in repo rate during the next monetary policy meeting in early December.
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