Retail inflation in India eased to 4.87 per cent in October on an annual basis, data released by the Ministry of Statistics & Programme Implementation showed on Monday.
A poll of 53 economists by Reuters had pegged the rate at 4.80 per cent. Inflation still remains above the Reserve Bank of India’s 4 per cent median target. Prices had cooled to 5.02 per cent in September owing to softer vegetable prices.
Inflation rate in urban and rural areas stood at 4.62 per cent and 5.12 per cent, down from 6.50 per cent and 6.98 per cent seen in the same month a year ago.
After a rise in July and August, volatile food prices—which account for about half of the consumer price index (CPI) basket—moderated. The rate of inflation in the Consumer Food Price Index (CFPI) stood at 6.61 per cent in October, against 6.62 per cent in September and 7.01 per cent in October 2022.
October inflation was below the RBI upper tolerance band of 2-6 per cent for a second consecutive month but the central bank last month kept its key lending rate steady for a fourth consecutive policy meeting and said it remains focused on bringing inflation close to the target of 4 per cent.
RBI Governor Shaktikanta Das had said in early October the central bank remains highly alert and prepared to take steps to align inflation to the target. India is vulnerable to “recurring and overlapping” food price shocks despite the recent moderation in inflation, Das said on Thursday.
“In these circumstances, monetary policy remains watchful and actively disinflationary to progressively align inflation to the target, while supporting growth,” Shaktikanta Das said in a speech delivered in Japan.
The RBI’s rate-setting panel 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 bank is expected to keep its key policy rate unchanged at 6.50 per cent at least until end-June 2024 before cutting it by 25 basis points in the following quarter, a separate Reuters survey showed.
