India’s retail inflation eased to a four-month low of 4.87% in October, driven by a decrease in food prices, according to government data released on Monday. This decline follows a three-month low of 5.02% in September and a previous low of 4.87% in June.
Economists have noted that while the data aligns with expectations, food inflation remains high, with the food price index remaining virtually unchanged at 6.6%.
“The Reserve Bank’s Monetary Policy Committee (MPC), in its October meeting, projected CPI inflation at 5.4% for 2023-24, a moderation from 6.7% in 2022-23,” said Madan Sabnavis, chief economist at Bank of Baroda.
Edible oils were a major contributing factor to the decline in inflation, with a 13.7% decrease in prices. Excluding this component, CPI would be as high as 5.6%. Core inflation also remains high, with health and personal care being particularly affected.
The government has mandated the RBI to ensure that CPI inflation remains at 4% with a margin of 2% on either side, with the central bank factoring in retail inflation in its monetary policy decisions.
Overall, while headline inflation numbers have cooled, food inflation continues to be a concern. Around 26% of the CPI witnessed high inflation in the food basket, particularly in spices, pulses, cereals, eggs, and fruits. The cautionary approach will likely be maintained until the impact of kharif shortfalls materializes in the coming months.
(With PTI inputs)
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