India’s retail inflation eases to 5 pc in Sept, falls below RBI’s upper band

New Delhi, (UNI) India’s retail inflation measured by consumer price index (CPI) eased to 5.02% year-on-year in September 2023 from 6.83% in the previous month on the back of softening food prices, according to data released by Ministry of Statistics & Programme Implementation (MoSPI) on Thursday.

After climbing to a 15-month high of 7.44% in July this year, headline inflation has now come down to Reserve Bank of India (RBI)’s upper tolerance level of 6%.

The data released on Thursday showed, food inflation declined to 6.56% in September from 9.94% in August.

Several market-watchers and analysts had predicted easing of retail inflation in the month of September attributing it to declining trend in food and vegetable prices. The food items account for nearly half of the consumer price index.

During the month of September, rural inflation was higher than urban inflation.

As per the official data, cereals and products inflation stood at 10.95% in September this year. Fruits and vegetables inflation were 7.30% and 3.39% respectively during the month under review. Edible oils inflation declined 14% in September.

“With uneven monsoon and several states reporting a possibility of a sub-par kharif crop, food inflation outlook remains grim. While 5% (inflation rate) is reached, the task downhill to the 4% will remain a challenge in the near future,” said Anitha Rangan, Economist, Equirus.

The Reserve Bank of India (RBI) has projected headline CPI inflation at 5.4% for FY24.

In its October 6 monetary policy, the RBI kept the policy repo rate unchanged at 6.5%. This was the fourth time in a row that the Monetary Policy Committee (MPC) of the RBI maintained status quo on the key interest rate.

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