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November 13, 2024

CRISIL Economy First Cut: Inflation soars, IIP rebounds

Macroeconomics | First cut

Gauge pierces past 6%, may push back rate cut

 

Continuing rise in food prices driven by vegetables and edible oils lifted the Consumer Price Inflation (CPI)-based index to a 14-month high of 6.2%, a touch above the Reserve Bank of India’s tolerance band of 4-6%.

Food inflation rose to 10.9%, its highest since July 2023. On the positive side, core inflation stayed below 4% for the 11th consecutive month, while fuel inflation was negative for the 14th month in a row.

Inflation in vegetables surged to 42.2% due to excess rains in pockets.

The surge in edible oil inflation in October (from 2.5% to 9.5%) was driven by global prices that saw a steep (27% on-year) rise because of supply disruptions in Southeast Asia.

Though benign, non-food inflation inched up to 3.1% from 3% as core inflation rose to a 10-month high of 3.8% driven by higher gold and silver prices. Discounting the bullion prices, the uptick in core was marginal.