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Retail inflation drops to 13-month low

CPI dropped further low from September's count of 4.41% to 4.31% due to lowering of vegetable prices

Policy Pulse
Publish Date: Oct 14 2016 11:33AM | Updated Date: Oct 14 2016 11:33AM

Retail inflation drops to 13-month low

 Creating space for further rate cut by Reserve Bank in coming months, the retail inflation in September dropped to 13-month low and reached to 4.31 %. 

Retail inflation, measured by Consumer Price Index (CPI), was 5.05 % in August. It was 4.41 % in September 2015. The previous low of 3.74 % was recorded in August last year.
Food inflation, a key concern for policy makers, decelerated sharply to 3.88 % in September compared with 5.91 % in August.
The Reserve Bank takes into account retail inflation while deciding on its key lending rate. It has been mandated to contain inflation at 4 %, within 2 % range on either side.
Earlier this month RBI had cut the key interest by 0.25 % to 6.25 %. Now, with inflation easing further it may consider another cut in December monetary policy review to boost industrial growth.
As per data released by the government, inflation in vegetable segment was in the negative, contracting 7.21 %. The vegetable inflation was 1.02 % in August.
Similarly, the pulses prices were subdued last month as also of egg and milk. Inflation in case of meat and fish basket was 5.83 % in September, marginally down over the previous month.