Business & Economy
India’s inflation jumps to 5.54% after RBI raises rates
Rural families face shrinking purchasing power as food absorbs more income.
Rural families face shrinking purchasing power as food absorbs more income.
Food is getting costlier for Indian households just as the has raised interest rates. Retail inflation climbed to 5.54% in September from 4.82% in August, driven by food and fuel costs. Rural families are likely to feel the strain most because they spend more of their income on food. Poor harvests, difficult weather, and volatile oil prices could keep prices unstable.
The RBI raised its to 5.50%, its first increase since February 2023, and lifted its inflation forecast for the to 5.2%. Higher rates can limit wider price increases by making borrowing more expensive, but they cannot quickly produce more food. They will also raise loan costs and could slow growth. The next test is whether the shock fades or spreads into rents, services and other prices, forcing further increases.
The RBI raised the by to 5.50%, its first increase since February 2023, as food, crude-oil and weather risks clouded the outlook. It raised its to 5.2% and projected inflation at 6.0% in the third quarter and 5.7% in the fourth. The policy stance shifted toward , with ruled out.
India’s rose to about 4.8% in August from 4.5% in July, remaining close to the and within its . had already begun contributing to the increase, but the reading still supported expectations that inflation pressures were manageable.