India’s CPI inflation reached a 5-month high of 7.4% in September.

Higher food prices caused retail inflation to spike to a five-month high of 7.4%, while factory output fell for the first time in 18 months, dealing a double blow to India’s economic recovery.

The second consecutive month of rise in consumer price index (CPI)-based inflation will add to the pressure on the Reserve Bank of India (RBI) to again raise interest rates to tame high prices. For the ninth consecutive month, inflation has exceeded the Reserve Bank of India’s 6% upper tolerance band. The RBI predicted 6.7% inflation for 2022–2023.

“This is the ninth month in a row that inflation is above the RBI mark, and it does not look likely to slow down any time soon, with prices of certain food products to be pressurized in coming months due to lower kharif output. Rice, pulses and oilseeds production is likely to be lower this time,” said Madan Sabnavis, chief economist at Bank of Baroda.

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