Retail inflation falls to 5-mth low in Oct

New Delhi India’s retail inflation eased to a 5-month low of 4.87 per cent in October, bringing much-needed relief to consumers, according to figures released by the National Statistics Office (NSO) on Monday. Sequentially, too, the inflation rate is lower than the corresponding figure of 5.02 per cent recorded in September.

The previous low inflation was recorded at 4.87 per cent in June. The Reserve Bank’s Monetary Policy Committee (MPC), in its October meeting, projected CPI inflation at 5.4 per cent for 2023-24, a moderation from 6.7 per cent in 2022-23. The central government has tasked the RBI to ensure the CPI inflation remains at four per cent with a margin of two per cent on either side.

There was a decline in fuel prices compared to the previous year as the government has reduced LPG prices in the run-up to key Assembly elections in States which will be followed by the Lok Sabha polls in the first half of next year.

Food inflation, which accounts for close to half of the overall consumer price index (CPI), stood at 6.71 per cent in October compared to 6.56 per cent in September.

The price of edible oils declined by 13.69 per cent and vegetable prices remained in check bringing relief to consumers.

However, pulses continue to remain an area of concern as prices went up by 18.79 per cent during the month and spices turned costlier by a whopping 22.76 per cent.

Cereals including wheat and rice also recorded a double digit rise of 10.69 per cent during the month.

The consumer price inflation is now closer to the 4 per cent midpoint of the RBI’s 2-6 per cent target range and will enable the central bank to keep interest rates on hold going ahead even as there is a downside risk due to the uncertainty in global crude oil prices which could push up inflation. The decline in the inflation rate is in line with the expectation of the RBI, which had kept its key interest rate unchanged to push up the country’s economic growth rate.

However, according to economists, there is still a need to be cautious as the effects of the erratic monsoon this year still has to play out which could impact food prices and geopolitical tensions such as the Israel-Hamas conflict may roil the oil markets.