Food Prices Drive India’s Inflation Rate To 5.49% In September

Food prices have been rising steadily for another month, pushing inflation to its all-time high. Inflation rose to 3.65% in August. While in September it increased to 5.49%. The main reason behind this increase is the rising prices of food items. Government figures point to clear consequences of higher food prices on inflation. In terms of the food segment, inflation was 5.66% in August, which increased to 9.24% in September. But why are food prices rising? Let us reveal the truth below.

What Is Driving The Surge In India’s Food Prices?

The National Statistical Office released data showing the food inflation graph where food inflation rose from 5.66% to 9.24% in a month. On the other hand, the Reserve Bank of India is trying its best to maintain a stable inflation rate at 4% with a 2% margin on either side. The inflation rate has even beaten economists’ expectations. These estimates expected retail inflation to be 5.04 per cent. If we talk annually, food inflation is high in both urban and rural areas. In rural areas, it is a 9.08% increase year-on-year. In Urban regions, it is 9.56%.

The Consumer Food Price Index also highlights food inflation. Food is a basic necessity. Thus, it has the power to affect every household. However, lower and middle-class people may be the most affected. However, the good news is that experts are predicting inflation to come under control in a few months. Thus, there is no need to worry. With time, inflation will be controlled. Prices of pulses, spices, meat, fish and sugar have already seen a decline.

Thus, overall inflation may remain at 4.5% in the current financial year. If that happens, the central bank may consider a rate cut. This will be the much-awaited thing for all businessmen. This will encourage an increase in the risk-taking capacity of Indian businesses. It will also make consumers more willing to spend rather than to save. This rise in food prices is a result of the harsh summer conditions that the country has gone through. Excessive heat in some parts while excessive rains in other parts affected crops a lot.

This hampered a good harvest. Whereas last year inflation was very low. Thus, it produced a low base effect. The market expects positive results in the remaining days of the financial year. New crops will be grown in September and October which will balance the impact of past destruction. With food inflation coming down, everything will work smoothly. We hope you got enough information about the effects of rising food inflation above.