RBI fails to meet inflation mandate; Sept CPI surges to 7.41 per cent

New Delhi [India], October 12 (ANI): India’s retail inflation surged to 7.41 per cent in September, remaining above the Reserve Bank of India’s mandated range of 2-6 per cent for the third straight quarter that would force the central bank to explain to the government the reasons for not being able to control the price rise.
As per the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, data released on Wednesday, the Consumer Price Index (CPI) based inflation rose to 7.41 per cent in September from 7 per cent in the previous month.
CPI-based retail inflation stood at 4.35 per cent in September 2021.
The price rise has been sharper in rural India. CPI-based inflation in rural India surged to 7.56 per cent in September while for the urban India it stood at 7.27 per cent.
The headline inflation has been above the RBI’s mandated tolerance range of 2-6 per cent for three consecutive quarters. Under the flexible inflation targeting framework, the RBI is deemed to have failed in managing price rise if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row. Now the RBI will have to explain to the government why inflation remained above the mandated 2-6 per cent range.
“The CPI inflation jumped to a sharper than expected, five-month high of 7.4 per cent in September 2022, with the sequential increase and the upside relative to our estimate of 7.2 per cent being primarily driven by food inflation,” said Aditi Nayar, Chief Economist, ICRA.
Food inflation spiked to a 22-month high of 8.4 per cent in September 2022, with a sharp sequential upmove in vegetables, cereals and spices.
The excessive rainfall in early October 2022 may adversely impact the kharif harvest and delay rabi sowing, thereby posing a material upside risk to the food inflation outlook. However, the impact of the same on the YoY food inflation prints is likely to be partly mollified by the high base that lies ahead for H2 FY2023, Nayar said.
The National Statistical Office (NSO) releases inflation data every month. The Price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster, according to an official statement released by the Ministry of Statistics & Programme Implementation.
During the month of September 2022, NSO collected prices from 99.9 per cent villages and 97.8 per cent of the urban markets while the market-wise prices reported therein were 89.5 per cent for rural and 92.1 per cent for urban, the ministry said. (ANI)