Food pushes India's retail inflation to nine-month high in September
Sept CPI at 5.49% vs 3.65% in August - govt
Food inflation at 9.24% vs 5.66% in August - govt
Vegetable prices rose 36% in September - govt
September Core CPI at 3.5% - economists
Recasts; adds details, comments, background in paragraphs 7-15
By Nikunj Ohri and Sarita Chaganti Singh
NEW DELHI, Oct 14 (Reuters) -India's retail inflation in September acceleratedto its highest in nine months, due to higher food prices, according to government data released on Monday.
Annual retail inflation INCPIY=ECI was at 5.49% in September, higher than 3.65% in August, and economists' forecast of 5.04%.
The print was the highest since December 2023, when retail inflation was at 5.69%.
The Reserve Bank of India seesinflation easing after a few months of higher readings and expects it to average 4.5% in 2024-25, it said last week, when it changed itsmonetary policy stance to neutral and opened the door to rate cuts.
The central bank's inflation target is at 4%.
Inflation of food, which accountsfor nearly half of the consumption basket, rose to 9.24%, compared to 5.66% in August.
Vegetable prices rose 36% year-on-year in September against a 10.71% increase in August.
The inflation rate for cereals was 6.84% in September compared to 7.31% in the previous month, while that for pulses was 9.89% against 13.6% in August.
September inflation rose sharply as the favourable base effect waned, while unfavourable weather conditions disrupted supply chains pushing up food prices, said Garima Kapoor, economist at Elara Securities.
RBI GovernorShaktikanta Das warned last week that significant risks to inflationpersisted from adverse weather conditions, geopolitical conflict and the recent increase in some commodity prices.
Fears of a widening Middle East conflict and potential disruption to exports from the major oil-producingnations have pushed global oil prices higher toaround $80 a barrel.
"Inflation uncertaintiescontinue to persist in the near-term, particularly with the recent rise in commodity prices like vegetable oils," Sakshi Gupta, economist at HDFC Bank, said.
Unseasonal rains could prove to be a risk as well.
India received above-average rainfall in September, and is forecast to witness unusually high rainfall in October, potentially damaging crops ready for harvesting such as rice, soybeans and pulses.
Core inflation, which strips out volatile food and energyprices, was 3.5% as against 3.3%-3.4% in August, according to two economists.
"The chances of a December rate cut at this stage remain low and are likely to hinge on how commodity price pressures evolve," HDFC Bank's Gupta said.
She forecastinflation falling back below 5% by the end of 2024.
India inflation at 9-month high in September https://reut.rs/4dJXKWE
Components of India's retail inflation https://reut.rs/4dKvTp1
Additional reporting by Nishit Navin and Hritam Mukherjee in Bengaluru; Graphics by Vineet Sachdev; Editing by Janane Venkatraman
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