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Wholesale potato prices more than double; WPI inflation hits seven month high in September

Among the major groups, the prices of food items rose at the fastest rate of 6.92 percent in September 2020. India’s wholesale prices rose at a seven-month high rate of 1.32 percent in the month of September, after rising 0.16 percent in the previous month. It was the second straight increase in wholesale prices, and the strongest pace since February, as the economy gradually recovers from the pandemic shock. While vegetable prices surged 36.5 percent, the prices of potato rose by 107.6 percent in the month. Among the major groups, the prices of food items rose at the fastest rate of 6.92 percent in the month, according to the Ministry of Commerce & Industry. Given the regional lockdowns and rising cases of coronavirus, inflation is on a rise in India. The World Economic Outlook released by IMF also highlighted that India is struggling through supply disruptions and a rise in food prices.

While inflation in most of the countries declined sharply in the initial stages of the pandemic, it has picked up in some countries, including India, the IMF report added. The rise in inflation is also expected to limit the scope of the Reserve Bank in further slashing the repo rate. Unless the inflation falls below the higher band of 6 percent, we don’t expect RBI to cut rates despite RBI Governor Shaktikanta Das stating to ‘look through inflation’, said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services. Meanwhile, the retail prices skyrocketed in September, taking the CPI inflation to 7.34 percent. The retail prices rose primarily due to high food prices, which grew at 10.68 percent in the month. Among the food items, vegetable prices soared by 20.7 percent, meat and fish by 17.6 percent, eggs by 15.5 percent, pulses by 14.7 percent, and the prices of spices rose by 11.7 percent in September.

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