New Delhi: Despite the efforts of the Reserve Bank, retail inflation is not taking its name to stop. In September, the rate of retail inflation reached 7.41 percent, which is the highest in five months. Earlier in August, retail inflation was 7 percent.
The government released data on Wednesday, saying that consumer price-based inflation rose to a five-month high in September due to an increase in food prices. There was retail inflation of 7 percent in August, which stood at 7.41 percent in September. This is the ninth consecutive month that the rate of retail inflation remained outside the Reserve Bank’s fixed 6 percent range. The biggest role in this is due to the increase in the prices of food products.
The Russo–Ukraine war escalated the crisis
The biggest reason for the steady rise in retail inflation is the impact on supplies due to the Russo-Ukraine war and rising prices of essential and everyday items like cereals, and vegetables. The increase in the rate of food inflation in August affected all the segments of inflation. However, the government also imposed restrictions on the export of all food products including rice, wheat, and flour to contain the prices in the domestic market, but there was no relief in the Consumer Price Based Index.
Food items increased the trouble
Inflation in food articles, which account for 40 percent of retail inflation, rose year-on-year to 8.60 percent in September, compared to 7.62 percent in August. Apart from this, the inflation rate of fuel and electricity reached 11.44 percent in September, which was 10.78 percent in August. The inflation rate of core sectors including cement, and coal also reached 6.1 percent in September, which was 5.90 percent till a month ago.
The decline in industrial production
On the one hand, retail inflation is increasing the crisis, on the other hand, the industrial production of the country is also declining. Industrial production growth slowed to 0.80 percent in August, from 2.4 percent in July and 13 percent in August a year ago. Although the growth rate of industrial production was in double digits in May and June this year, there has been a steady decline since then.
Which sector has the most losses?
If we look at the data released by the National Statistics Office, the biggest decline in August was seen in the manufacturing sector, where there has been a growth rate of zero to 0.7 percent. Apart from this, the production rate of the mining sector also fell below zero by 3.9 percent, while the energy sector has made a growth of 1.4 percent. Earlier in the Corona period in April 2020, there was a big decline of 57.3 percent in industrial production.
