Reserve Bank of India (RBI) governor Shaktikanta Das has consistently underlined the policy pursuit of low inflation on a durable basis. Government data released on Monday shows just how challenging that task is. Consumer price inflation in September surged to a nine-month high of 5.49%, measured on the same month of 2023 as its base.
This is an upshoot from its 3.65% reading in August. Though a bounce above 5% was expected, since last year’s September had seen a slight cool-off in prices, the latest number is still worrisome. Much of it was due to food prices.
Vegetables, in particular, recorded a red-hot 36% rise. Prices of pulses rose 9.8% from a year earlier, while the overall food inflation rate stood at 9.2% last month. Hopefully, plentiful rainfall this year will help cool food prices. But war tensions in West Asia have put crude oil prices at the risk of a flare-up that could fan local inflationary embers.
We now await October’s inflation data to assess how long it might take for the last bit of disinflation to be achieved. If price stability again begins to look out of reach, RBI might hold its policy rate steady even in December. A neutral stance doesn’t necessarily imply monetary easing is imminent.
