Retail Inflation reached the highest level of 14 months

Retail inflation reached 6.21 percent in October which has brought everyone in shock. Inflation is at its highest point in 14 months. Initially, this record was set in August 2023, when inflation was 6.83 percent.

Due to poor weather and high-priced vegetables, retail inflation increased to 5.49 percent in September 2024. The cost of food increased in October as well, which caused the inflation rate to rise higher than expected by experts.

Food items contribute about 50 percent to the inflation basket. Its inflation has increased from 9.24 percent to 10.87 percent every month. At the same time, rural inflation has increased from 5.87 percent to 6.68 percent and urban inflation has increased from 5.05 percent to 5.62 percent.

The government has given the responsibility to the Reserve Bank of India (RBI) to keep the retail inflation at 4 percent. There can be a variation of 2 percent in it. This means that if inflation remains within the range of 2 to 6 percent, then it is a satisfactory figure for the central bank.

But the moment inflation goes out of this range, it becomes a cause of concern for the government and RBI. Now in October, it has crossed the 6 percent mark. In such a situation, the concern of RBI must have increased and it may also take some measures in this regard. Usually, the central bank increases the interest rate in such a situation.

This is a game of demand and supply. The more money people have in their pockets, the more would be the buying action. That implies growing demand for those products and its effect will be in the form of a jump in prices. Now, in such a situation, the role of demand is going to be very important. If the supply increases, then the demand will start getting fulfilled and the prices will soften.

In other words, the more the flow of money in the market, the greater the demand causing inflation. In case of less demand and more supply, there would be less inflation. The government and RBI work towards balancing this demand and supply.

The lower factors of manufacturing improved India's industrial production to 3.1 percent during September. Factory output, measured in terms of the use of the Index of Industrial Production, rose 6.4 percent in September this year. However, in August 2024 it was in the negative zone at (-) 0.1 percent.

National Statistical Office (NSO) issued data that showed growth in mining, manufacturing, and electricity for September 2024 recorded at 0.2 percent, 3.9 percent, and 0.5 percent respectively.