British inflation steadies at five-year high in October

Consumer inflation for the month of October surged to 3.58 per cent as against 3.28 per cent in September

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Retail inflation in the country picked up in October to a seven-month high, driven by faster rise in prices of food, fuel and housing, dampening chances of an interest rate cut by RBI next month.

The Central Statistics Office (CSO) and the Ministry of Statistics and Programme Implementation, in a latest report, said the Consumer Price Index (CPI) based inflation was 3.28 per cent in September, 4.2 per cent in October previous year. Pulses continued to show a fall in prices at a higher pace, of 23.1 per cent compared to 22.5 per cent in September. However, fruits were comparably cheaper in October on sequential basis.

"There is, however, a low likelihood of a rate cut by the RBI in the immediate term", said Aditi Nayar, an economist at ICRA, an Indian arm of the rating agency Moody's, adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.

According to the data, the food inflation for October was recorded 1.90 per cent higher than September's 1.25 per cent and August's 1.52 per cent.

Prices of protein-rich items like eggs and milk (and its products) also increased.

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But the increases were offset by the falling motor fuel and furniture prices and the costs of owner occupied housing.

Ratings agency Crisil said: "In the months ahead, inflation could see an upside from further rise in oil prices and higher household spending led by implementation of farm loan waiver and an expected upward revision in salary and allowances of state government employees".

During the 23rd Goods and Services Tax (GST) council meeting, tax rates were lowered for 213 items. "Our quantitative analysis suggests that if (a big if) the GST tax changes are fully passed on to consumers, they would lower CPI inflation by estimated 20 basis points", Nomura said.

The government is releasing consumer price inflation data since January 2012 based on combined data for rural and urban consumers.

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