Indian inflation continued to remain extremely high with October inflation printing at 8.6% oya (0.6% m/m, sa). Underpinning this month’s inflation was a sharp acceleration in non-food primary articles (e.g. fibres, silks, rubber) reflecting the sustained rise in global commodity prices in recent weeks.
More worryingly, while the level of manufacturing ex-food inflation continues to remain sticky at the 5% level, its monthly momentum has increased steadily over the last five months. While food inflation finally abated (14.1 % oya in October versus 15.7 % the previous month), it still remains firmly in the double digits. More ominously, after declining for three consecutive weeks in October, weekly food prices ticked up sharply again in the last week of October.
The sharp and sustained price rise in key global commodities is beginning to materially impact domestic prices in India. All three components of primary articles (food, non-food, minerals) had risen sharply in September, in reaction to the surge in global commodity prices in recent months.
Compounding the sharp rise in non-food primary articles is the fact that the momentum of manufacturing ex-food inflation continues to rise. While the level of manufacturing ex-food inflation has stayed in the 5% range (rising mildly to 5.1 % oya this month), the sequential momentum has been on the rise since June of this year.