Food inflation at 22-month high of 8.4 pc
BBN Bureau
MUMBAI/October 12-2022: The headline CPI inflation witnessed a sharper-than-expected uptick to 7.4 per cent in September 2022 on a year-on-year (YoY) basis from 7 per cent in August 2022.
In a note commenting on the new inflation numbers, ICRA, the leading rating agency said, “After the uncomfortable inflation print of 7.4 per cent for September 2022, another rate hike in the policy repo rate is certain by the Monetary Policy Committee (MPC) review.”
The quantum of hike will depend on ho much the inflation print recedes in October 2022 as well as the strength of the GDP growth for Q2 FY23, according to ICRA rating agency.
While the new inflation print was partly attributed to an adverse base, the uptrend was fairly broad-based across major categories in September 2022 relative to August 2022 amidst an unexpectedly larger spike in the food inflation.
“The early data for October 2022 reveals a mixed trend in the price of essential commodities, however, the excessive rainfall in the ongoing month may adversely impact the kharif harvest and delay rabi sowing, thereby posing a material upside risk to the food inflation outlook,” said ICRA rating agency in its note.
Food Inflation
The food and beverages displayed a 22-month high inflation of 8.4 per cent in September 2022, up from 7.6 per cent in August 2022. Amidst a slow base, there was a rise in the YoY inflation in seven of the heavily weighted items (with a weight of 36.8 per cent in the CPI) such as vegetables led by tomatoes, potatoes, onions etc.
Notwithstanding a high base, the CPI inflation is projected at an approximate 6.5 per cent in October 2022, remaining above the 6 per cent upper threshold of the MPC’s medium-term target. Accordingly, another rate hike in the policy repo rate appears certain in the December 2022 MPC review.
