New Delhi: With the cooling prices of food items and vegetables, India’s headline retail inflation rate fell to a four-month low of 4.87 per cent in October this year. However, the previous low inflation was recorded at 4.8 per cent in June, while it was a three-month low of 5.02 per cent in September, government data showed on Monday.
Although the retail inflation remained within the Reserve Bank of India’s (RBI) tolerance range of 2-6 per cent for a second month in a row, it has now been above the medium-term target of 4 per cent for 49 consecutive months. The RBI in its October monetary policy meeting projected the CPI inflation at 5.4 per cent for 2023-24, a moderation from 6.7 per cent in 2022-23.
The Consumer Price Index (CPI-based) retail inflation eased to a three-month low of 5.02 per cent in September, with the rise in vegetables prices easing to 2.7 percent from 3.4 per cent even though overall consumer food price inflation remained unchanged at 6.6 per cent.
“Inflation faced by rural consumers eased from 5.33 per cent in September to 5.1 per cent, but urban households saw a fractional increase in inflation at 4.65 per cent. On a month-on-month basis, consumer prices were up 0.65 per cent, while food prices were up 1.06 per cent, with urban food prices rising 1.14 per cent,” the ministry of statistics and programme implementation said.
The retail inflation had eased to nearly 5.02 per cent in September due to a sharp moderation in food prices, especially of vegetables, and the impact of the LPG price cut.
“The stability in interest rates has played a crucial role in bolstering consumer and business confidence. Despite some headwinds, the housing market continues to outperform global counterparts, and the persistence of stable interest rates is expected to further stimulate demand in the housing sector,” said Vivek Rathi, director (research), Knight Frank India.
The government has tasked the RBI to ensure the CPI inflation remains at its tolerance limit. The RBI had kept the key repo rate unchanged at 6.5 per cent on concerns over high inflation.
“RBI may rethink cutting the repo rate only when it sees CPI inflation at around 4 per cent, or below, on a durable basis. As per the RBI projection, inflation is expected to be at 5.4 per cent in Q1, 6.4 per cent in Q2, 5.6 per cent in Q3, and 5.2 per cent in Q4,” RBI governor Shaktikanta Das had said.
