Retail inflation drops to 5.5 pc in Oct

Retail inflation drops to 5.5 pc in Oct

Helped by softening prices of food items, the retail inflation declined to 5.52 per cent in October, the lowest since the new series of data was introduced in January 2012.

This is the fourth consecutive month of decline in the Consumer Price Index based inflation or retail inflation which had fallen to 6.46 per cent in the previous month.

The overall food inflation measured on CPI came down to 5.59 per cent in October as against 7.67 per cent in the previous month.

Retail prices of vegetables declined by 1.45 per cent as against a rise of 8.59 per cent in September, according the the data released by the Ministry of Statistics and Programme Implementation.

Inflation in fruits slowed to 17.49 per cent from 22.4 per cent in September. Similarly the rate of price rise in protein rich items like eggs, fish and meat was at 6.34 per cent in October, slightly down from 6.35 per cent in the previous month.

The data on inflation based on Wholesale Price Index for October will be released on Friday. WPI inflation had dropped to a near five-year low in September to 2.38 per cent, helped by moderation in food and fuel prices.

The Reserve Bank has of late started targeting retail inflation, while deciding on its bi-monthly monetary policy. RBI has been targeting a retail inflation of 8 per cent by March 2015 and 6 per cent by March 2016.

RBI's next monetary policy is due on December 2, 2014. "The inflation data is very encouraging. It is little below what the market was expecting. Lower base rate and softening food prices also helped.
"It is building a case for a rate cut. But whether the Reserve Bank will do in December or not, it is a little more wait and watch, but a rate cut is very possible," said Abheek Barua, Economist with Indian Council for Research on International Economic Relations (ICRIER).

Retail inflation in cereals and products also came down to 6 per cent in October from 6.42 per cent in the previous month. For pulses and products it went up a tad to 7.51 per cent from 7.18 per cent in September.

Inflation in the category of fuel and light also softened to 3.29 per cent during the month,  and milk and milk products the rate of price rise was at 10.79 per cent as against 11.08 per cent.

The rate of price rise in non-alcoholic beverages was 5.64 per cent; food and beverages 5.68 per cent and sugar 0.37 per cent.

The data further showed that consumer inflation came down to 5.55 per cent in urban India and 5.52 per cent in rural parts during October. In the previous month of September, the respective figures stood at 6.34 per cent and 6.68 per cent.

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