India’s Retail Inflation Drops to Three-Month Low of 5.02%
Declining Food Prices Influence India’s Retail Inflation
India’s retail inflation has reached a three-month low of 5.02% in September, primarily driven by a significant drop in food prices, as indicated by recently released government data. This decline brings inflation back within the desired sub-6% threshold set by the Reserve Bank of India (RBI), after surpassing it for two consecutive months with Consumer Price Index (CPI)-based inflation rates of 6.83% and 7.44% in August and July, respectively.
Reaching its Lowest Point Since June
The last time inflation fell to such levels was in June, when it recorded at 4.87%. This recent decline in inflation is noteworthy as it aligns with the central bank’s target range after two months of exceeding the threshold. The decrease in inflation is largely attributed to the subsiding food prices, which have a substantial impact on the overall CPI.
Positive Development for Monetary Policy
The Reserve Bank of India closely monitors inflation trends, particularly in light of recent breaches of their target range. The return to the sub-6% level will likely be seen as a positive development, providing some relief in terms of monetary policy considerations. This drop in inflation, confirmed by official data released on Thursday, marks a notable shift from the previous two months when it had exceeded the central bank’s target range. It further emphasizes the influence of food prices on India’s broader economic indicators and their role in shaping monetary policy decisions.
India’s retail inflation has dropped to a three-month low of 5.02% in September, influenced heavily by declining food prices, according to recently released government data. This downturn brings inflation back within the Reserve Bank of India’s desired sub-6% threshold, after exceeding it for two consecutive months with Consumer Price Index (CPI)-based inflation readings of 6.83% and 7.44% for August and July respectively.
The last time inflation fell so low was in June when it registered at 4.87%. The recent decline in inflation is significant as it realigns with the central bank’s target range after a two-month streak above the threshold. The decrease in inflation is largely attributed to subsiding food prices, which have a substantial impact on the overall CPI.
The Reserve Bank of India has been closely monitoring inflation trends, particularly in light of the recent breaches of their target range. The return to the sub-6% level will likely be seen as a positive development, providing some relief in terms of monetary policy considerations.
The official data released on Thursday confirmed the dip in inflation, marking a notable shift from the previous two months when it had exceeded the central bank’s target range. This recent downturn in inflation underscores the influence of food prices on India’s broader economic indicators and their role in shaping monetary policy decisions.
