NEW DELHI: India’s retail inflation fell sharply to an eight-year low of 1.54% in September, falling below the lower tolerance limit of the Reserve Bank of India’s 2-6% target band. The fall is primarily driven by lower food prices.
Food inflation fell to -2.28%, marking the fourth consecutive month of negative food inflation. Vegetable prices plunged dramatically—down 21.38% year-on-year—while for the pulses, there was a fall of 15.32%, together dragging the food basket lower. “Vegetables, edible oils, fruits and pulses led the decline,” said Dharmakirti Joshi, chief economist, Crisil.
The headline inflation for rural areas stood at 1.07%, while urban inflation moderated to 2.04%. Amid this backdrop, core inflation (excluding food and fuel) rose, reaching 4.5%, partly fuelled by surging gold prices.
Economists expect the inflation to remain low in the coming months, on the back of the GST reforms implemented in September. “Inflation is expected to remain benign on the back of low crude prices and the impact of GST rationalisation on retail prices,” added Joshi.