New Delhi: Wondering why your wallet is turning dry these Covid days? Blame costly meat and vegetable prices!
On Monday evening, official data pointed out cost of vegetables spurt by 20.73 percent in September 2020 from a year ago. Cost of pulses is up by 14.67 percent.
Cost of meat and fish is up by 17.60 percent while eggs turned costly by 15.47 percent.
Overall, the retail price inflation spiked in September to 7.34 percent from 6.69 percent.
And if you believed relocating to a village could make living easier, you could be mistaken. Be it urban or rural India, inflation seems to be pinching every nook and corner. The National Statistical Office (NSO) data showed CPI Urban rising to 7.26 per cent in September from 6.80 per cent in August. Meanwhile, CPI Rural increased to 7.43 per cent last month from 6.66 per cent in August.
Besides, the data showed that India's consumer food price index during the month under review rose to 10.68 per cent against 9.05 per cent reported for August 2020. The CFPI readings measure changes in retail prices of food products.
According to the data, sugar, confectionaries, fuel and light category saw a increase of 2.4-2.8 percent.
The high inflation is equally a matter of concern for the Reserve Bank of India. The RBI revises interest rates periodically and has desisted from dropping interest rates in the last two revisions citing a spurt in inflation. The RBI is mandated to keep inflation within a targeted range of 4 percent - plus or minus by 2 percent.
Several media outlets carried rosy pictures of economic upliftment attributing to improvement in auto sales numbers and increment in property sales. However, the CPI numbers indicates a steep rise in cost of living. What the media does not question is whether costly vegetables will throw the average Indian from shopping in the upcoming festive season.
That uncomfortable question is also what economists have in mind.
"The CPI inflation hardened beyond our expectations to an eye-watering 7.34 per cent in September 2020, and crossed the 7 per cent mark, driven primarily by a further uptick in food inflation, which remains in the grip of an upward spiral in vegetable prices, rising prices of eggs, meat and fish, and sticky prices of pulses and oilseeds," said Aditi Nayar, Principal Economist, ICRA.
She adds, "Even though the high food inflation will eventually prove to be transient, with the favourable base effect and kharif arrivals to soon initiate a downward trajectory, the average inflation figures for FY2021 as well as H2 FY2021 are likely to be uncomfortably high."
Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research said: "The CPI print for Sep 2020 comes as a bit of surprise with overall CPI and CPFI having shot up further to 7.3 per cent and 10.7 per cent, respectively."
"This is contrary to the market expectations that with the unlocking of the economy and the easing of the supply constraints, the food prices will moderate over the next few months. Clearly, the supply constraints continue to exist despite a favourable monsoon and good agricultural production as reflected in the higher double digit inflation in not only protein items but also vegetables and spices."
Sunil Kumar Sinha, Principal Economist, India Ratings and Research: believes that three quarters of retail inflation spinning over 6 percent is a tough challenge for the financial regulator. "India Ratings believes the RBI may pause on policy rate in the remainder of FY21 but will continue to take other measures to make financial markets function smoothly.