India's inflation jumps to 6.09%, breaches RBI's upper limit
What's the story
India's retail inflation surged to 6.09% in October, up from September's 5.54%. The spike is largely attributed to a broad-based increase in food prices, which have been hitting household budgets hard. This is the 12th consecutive month of rising consumer prices in the country. The data was released by the Ministry of Statistics and Programme Implementation on Thursday.
Economic impact
Inflation crosses RBI's upper tolerance limit
The October inflation figure has crossed the Reserve Bank of India's (RBI) upper tolerance limit of 6%.
Nearly half of the economists surveyed by Reuters had predicted that inflation would breach this mark.
Food inflation rose sharply to 8.94% in October from September's 7.74%, indicating a widespread increase in prices for essential food items.
Price pressures
Rising food prices biggest contributor to inflation
Food prices, which make up nearly 40% of India's consumer price index, are the biggest contributor to rising retail inflation.
Onion prices have nearly doubled since January, while other protein-rich foods such as meat and milk have also become more expensive.
Global food prices have added to domestic pressures through rising costs of imported edible oils and other commodities.
Future outlook
Economists warn of double-digit inflation in essential food categories
Economists have warned of possible double-digit inflation in several food categories, including meat, fish, oils and fats, fruits and vegetables.
Retail inflation has stayed above RBI's medium-term target of 4% for four straight months.
Price pressures are likely to continue in the coming months as global oil prices remain about 40% higher than pre-US-Iran war levels.
Monetary policy
RBI revises inflation forecast, signals rate hike
The RBI has revised its inflation forecast for the current financial year to an average of 5.2%, up from the previous estimate of 5%.
This is also higher than the median estimate of 5.1% in a Reuters poll last month.
The central bank began its rate-hike cycle in October and is widely expected to raise the repo rate by another 25 basis points to 5.75% at its December policy meeting, according to a Reuters poll.