India’s retail or Consumer Price Index (CPI) inflation has gone down to 6.77 per cent in October from 7.41 per cent in September. This was stated in the data released on November 14 by the National Statistical Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI).
This is for the first time in three months that retail inflation has slipped below the 7 per cent mark and only the second time since April’s eight-year high mark of 7.8 per cent.
However, it still remains above the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent for the 10th consecutive month.
A slower rise in food prices and a higher base effect are the major factors behind the easing of inflation. Food prices, which account for nearly 40 per cent of the Consumer Price Index (CPI) basket, rose 7.01 per cent in October, compared with 8.60 per cent in September.
Cereal prices rose 12.08 per cent annually in October, compared to 11.5 per cent in the previous month, while inflation in meat and fish stood at 3.08 per cent, compared to 2.55 per cent in September.
That the Wholesale Price Index (WPI) inflation has dipped to a 19-month low of 8.39 per cent in October on easing prices of food, fuel and manufactured items brings further hope of retail inflation going down.
However, economists say that although inflation has peaked in India, the easing process is likely to remain slow. Reaching the 4 per cent mark — the middle level of the RBI target — may take up to two years.
If international commodity prices remain under control, the base effect is expected to accelerate the easing of inflation from December 2022 onwards.
Currently, however, the RBI Monetary Policy Committee (MPC) is expected to continue with the trend of raising the repo rate in its monetary policy review.