Inflation based on the Consumer Price Index (CPI) rose to 4.5% on-year in October compared with 4.3% in September. In October 2020, CPI inflation was 7.6%. This high-base effect has kept headline inflation benign.

The effect was most prominent in food inflation, which printed at 0.8% (on-year) for October versus 0.7% in September and 11% for October 2020. Items where inflation fell were vegetables (-19.4% in October versus -22.4% in September), pulses (5.4% vs 8.7%), and eggs, meat and fish (6.3% vs 7.9%).

Fuel inflation, however, continued to scorch, rising to 14.3% on-year versus 13.6% in September.

Consumers have been bearing the brunt of surging global crude oil prices with excise duty on petrol and diesel unchanged in October, while prices of liquefied petroleum gas were hiked. Brent crude prices jumped up 12.1% on-month to $83.7 per barrel on average this October, a 7-year high. The impact of the recent excise duty cuts on petroleum products in India, though, is expected to show up in the November inflation data.

Core inflation¹ remained sticky at 5.9% on-year, same as September. Key items that contributed to the rise were transport and communication (10.9% vs 9.5%), clothing and footwear (7.5% vs 7.2%), household goods and services (6.2% vs 5.9%), and personal care and effects (2.5% vs 1.9%). This is indicative of producers passing on rising input costs to consumers amid surging cost pressures.

Urban inflation rose to 5% in October on-year vs 4.6% in September. However, rural inflation stayed stable at 4.1%, same as September.