In September, household budgets in India felt the strain of rising vegetable prices, and there is little relief expected in October. According to data released on Monday, retail inflation in India surged to 5.5% in September, up from 3.65% in August, driven largely by an increase in food and beverage costs. The inflation rate for food and beverages reached a four-month high of 8.36%, a significant jump from August’s 5.3% rise.
The steep increase in vegetable prices was the primary factor behind the inflation surge. Vegetable prices saw an alarming year-on-year rise of 35.99% in September, a sharp contrast to the 10.7% increase recorded in August. On a month-on-month basis, vegetable prices continued to increase, rising by 3.5%. This sustained upward trend in prices for essential vegetables such as potatoes, onions, and tomatoes added to the burden on consumers. While potato and tomato prices experienced slight relief in September, onion prices continued to climb, contributing to the overall surge in vegetable costs.
Inflation in other vegetables also followed a similar trend. Vegetables such as brinjal, carrots, cabbage, cauliflower, parwal, peas, spinach, and various leafy greens all recorded inflation rates exceeding 20%, highlighting the broad-based nature of the price increase. Factors such as rainfall and supply chain disruptions contributed to the price hikes, making it difficult for households to avoid the rising costs.
In addition to vegetables, other food products experienced price fluctuations. The recent hike in import duties caused edible oil prices to rise on a sequential basis, while garlic prices surged by over 70% compared to the previous year. Pulses, on the other hand, provided some relief, with prices easing slightly from previous levels. However, pulses remained expensive, adding further strain to household food budgets.
Kaushik Das, the chief India economist at Deutsche Bank, provided insights into the outlook for inflation in the coming months. In a research note, he explained that vegetable prices remained high in October. Combined with a negative base effect, this suggests that October’s Consumer Price Index (CPI) inflation could fall between 5.5% and 6.0%. However, Das added that with monsoon rains performing better this year compared to the previous year, there is potential for price pressures to ease from November onwards as vegetable prices begin to normalize and revert to their usual trends.
Aside from food and beverage inflation, other sectors showed varied inflation patterns. Utility inflation saw a slight reduction, as electricity prices eased. However, gold and silver prices remained elevated, continuing their upward trend with a 20% year-on-year increase. Additionally, the telecommunications sector saw the effects of mobile tariff hikes, with charges rising by 10.3% in September, further contributing to inflation in essential services.
In summary, India’s inflationary pressures in September were predominantly driven by skyrocketing vegetable prices, which significantly impacted household expenses. Although pulses offered some reprieve, other key food items like garlic and edible oils saw price increases. The outlook for October remains challenging, with inflation expected to remain high before potentially easing in November due to improved monsoon conditions. Consumers will continue to face higher costs for utilities, precious metals, and mobile services in the near term, further complicating the economic landscape for many households.