Retail inflation cools down to over eight years low of 1.54% in September on cheaper vegetables, pulses

New -delhi: India’s retail inflation cooled to 1.54% in September from 2.07% the previous month, which was the lowest lecture since June 2017, mainly due to the statistical effect of a favorable base and driven by lower prices of vegetables and pulses. This is broadly in line with the projection of the 1.5% economists in a coin poll. With this, inflation dropped for the second time in three months below the lower tolerance restriction of the Reserve Bank of India’s (RBIs) target tire. However, since it is largely driven by the base effect, it is unlikely to be alarming. In September 2024, food inflation jumped to 9.2% from 5.7% the previous month, creating a favorable base this year. As such, food inflation dropped to -2.28% in September from -0.64% in August. Apart from the base effect, the decline in prices of vegetables and pulses has contributed to pulling off the head inflation. Foods make up almost 40% of the inflation basket and have a huge impact on the head inflation. The latest pressure took the average for July-September to 1.74%, broadly in line with the RBI’s latest projection of 1.8% for the quarter. Earlier this month, the Monetary Policy Committee of the Central Bank (MPC) reviewed its forecasts, as inflation underlined its expectations in earlier months. In addition, benign food prices and the impact of the cutting of goods and services (GST) are expected to exert downward pressure on prices. Inflation is also expected to be below 2.8% in the current quarter before it rises to 4% in the last quarter on the base effect that becomes unfavorable.