Retail food inflation records three-month high at 9.24% in Sep

India’s retail food inflation jumped to a three-month high of 9.24% in September, up from 5.66% in August, driven by soaring vegetable prices and the emergence of inflation in edible oils. The sharp increase in food and beverage inflation was led by vegetables, with prices spiking 36% in September, a 14-month high.

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The retail food inflation spiked to a three-month high of 9.24% in September, up from 5.66% in August, primarily driven by soaring vegetable prices and the return of inflation in edible oils. The Consumer Food Price Index (CFPI) rose 1.17% from the previous
month, compared to 6.62% in September last year. The sharp increase in food and beverage inflation was led by vegetables, with prices
spiking 36% in September, a 14-month high, up from 10.7% in August. Onion and potato prices saw the steepest increases, rising by 66% and 64.9%, respectively.
Tomato prices also rose 42%, although this increase was largely due to a base effect, as tomato prices had declined sharply by 47% in August. The Agriculture Ministry estimates potato production at 56.76 million tonnes (MT) and onion production at 21.23 MT for the 2023-24 crop year (July-June), marking declines of 6% and 20%, respectively. Edible oils, which had experienced deflation for a year, saw inflation return with a 2.47% rise in September due to higher import duties. Mustard oil prices also increased by 6.31%.

Pulses inflation eased slightly to 9.8% in September, down from 113% in August, as expectations of a strong kharif harvest and increased imports helped soften prices. However, retail pulses inflation has remained in double digits since June 2023, due to lower production of key varieties like chana, tur, and urad. The gram variety saw the highest price increase at 21.2%, while arhar and urad prices rose by 11.44% and 9.4%, respectively.

Cereal inflation fell slightly to 6.84% in September from 7.31% in August, thanks to a decrease in rice and wheat prices. The government has taken steps to control prices, including open market sales of rice at subsidized rates and lifting export restrictions. Inflation in the meat and fish category dropped to 2.6%. Chicken prices declined by 3.1% last month. Price rise in milk last month was only 3% on year. Milk prices rose moderately by 3%. Spices inflation also declined, with jeera prices dropping by 31.8%.

For rural consumers, inflation approached the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, reaching 5.9%. Urban consumers, in comparison, experienced a price rise of 5.05% last month. However, rural India saw slightly lower food inflation at
9.1%, compared to the 9.6% increase faced by urban consumers.