Higher food prices accelerate India's retail inflation in October

Food and fuel prices push India's retail inflation in October

India Inc on Tuesday said the spike in inflation, which rose to a six month high of 3.59 percent in October, will ease in the coming months.

Inflation has soared this year as a Brexit-hit pound ramped up import costs, which led the Bank of England to raise its key interest rate for the first time in a decade at a meeting earlier this month.

According to the data, the food inflation for October was recorded 1.90 per cent higher than September's 1.25 per cent and August's 1.52 per cent.

The pace of price rise of crucial services like heal-thcare, education, among others has been higher in rural areas compared to urban areas.

"We don't expect that the rise in inflation rate is sustainable; the average inflation should remain below 4 per cent for the current financial year".

Rising prices for food and, to a lesser extent, recreational goods provided the largest upward contributions to change in the rate between September 2017 and October 2017. Crucial services such as education, healthcare, personal care, etc have seen an inflation of 3.48 per cent.

Pan, tobacco and intoxicants saw high inflation and settled at 6.91 per cent. Clothing and footwear (4.76), housing (6.68), and fuel and light (6.36) were costlier on sequential basis. Within food inflation, the price of vegetables, milk and milk products contributed to the increase.

But the increases were offset by the falling motor fuel and furniture prices and the costs of owner occupied housing.

New Delhi, facing risks of a widening fiscal deficit this year mainly due to lower growth in revenue receipts, wants the RBI to ease policy rates to support private investments and revive economic growth. The GST Council's recent decision to cut the rates on around 200 items is likely to further dampen the rate of price rise of these items.

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