Food prices spur CPI inflation to 3.58% 

Food prices spur CPI inflation to 3.58% 

Context:

According to the recently released data by the Ministry of Statistics and Programme Implementation, retail inflation accelerated to 3.58% in October on the back of rising food and fuel prices.

Introduction:

• Consumer price index (CPI)-based inflation rose to this financial year’s highest rate of 3.58 per cent in October, from 3.28 per cent in September, with food and fuel prices increasing at a higher pace.
• This could stop the Reserve Bank (RBI) from cutting rates in its policy review next month to spur falling industrial growth.
• Inflation as measured by the Consumer Price Index(CPI) was 3.28% in September and as low as 1.46% in June.    
• The food and beverages component of CPI saw a growth of 2.26% in October, the fastest pace since March, and up from 1.76% in September.
• This was mainly due to a sharp uptick in vegetable prices.
• The Global crude prices are firming up and will have a longer term adverse impact on Indian inflation.
• In October, the RBI’s Monetary Policy Committee had said that retail inflation was broadly moving along expected lines and projected that the rate would quicken to 4.2% to 4.6% over the following six months.

Consumer Price Index (CPI):

• Consumer price index (CPI) is a statistic used to measure average price of a basket of commonly used goods and services in a period relative to some base period.
• A consumer price index (CPI) measures change in the price level of market basket of consumer goods and services purchased by households.
• The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
• Sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index.
• It is of one of several price indices calculated by most national statistical agencies.
• The annual percentage change in a CPI is used as a measure of inflation.
• In most countries, the CPI, along with the population census, is one of the most closely watched national economic statistics.