New DELHI: Retail inflation in October fell to 6.77%, the lowest in three months, on the back of a sharp decline in food inflation. The sub-7% reading came as a relief for the government as well as the Reserve Bank of India (RBI) even though the figure is slightly higher than the analysts' estimate of 6.7%.
The retail inflation, which is measured by Consumer Price Index (CPI), was 7.4% in September and 7.01% in August.
Food and beverages inflation in October rose by 7.04% compared to 8.41% in September. However, cereal prices continue to see a double-digit spike registering a 12.08% rise in October compared to 11.53% in September. Fuel and light inflation, meanwhile, moderated to 9.93% in October compared to 10.39% in September.
"A favourable base effect and a sequential downtick in the prices of fruits and oils and fats helped to cool food and beverages inflation to 7% in October 2022, in spite of the impact of the unseasonal rainfall on vegetables," said Aditi Nayar, chief economist, ICRA Ratings.
There was a note of caution, however, from economists who feel continuous increase in cereal prices might hit the poor most.
“Continuous increase in cereals inflation does not augur well for the households at the bottom of the income pyramid, as they spend a disproportionately larger share of their income/expenditure on food products," said Dr Sunil Sinha, Principal Economist, India Ratings & Research.
Cereals and product inflation has been in excess of 5% since March 2022 and in double digits in the past two months.
Miscellaneous items, health, education and personal care and effects reported a rise in the year-on-year inflation in October 2022 compared to that of September.
Going forward, experts believe that high-base effect is likely to help further moderation of retail inflation to around 6% in November 2022.