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Published: October 11, 2023
Updated: October 11, 2023

September Retail Inflation Eases to 5.4%: Insights and Implications

In a significant shift, India's retail inflation is expected to have decreased to 5.4% in September, down from 6.8% in August. This encouraging trend can be attributed to a correction in vegetable prices, which had driven inflation higher in the previous months. A recent poll conducted by Mint, involving 18 economists, offers this insightful glimpse into the evolving economic landscape.

Understanding the Data:

Vegetable Prices Stabilize: The primary reason for this decrease is the stabilization of vegetable prices. After causing inflationary pressure in the past two months, vegetable prices have now decelerated, contributing to the overall drop in inflation.

Wide Range of Expectations:

According to the poll, the expected range for September's Consumer Price Inflation (CPI) varies between 5.1% and 6.5%. Worryingly, most economists anticipate that inflation will surpass the upper-tolerance limit set by the Reserve Bank of India (RBI).

Quarterly Projection:

Should these projections hold, the quarterly average for July to September would be 6.6%, slightly exceeding the RBI's latest projection of 6.4%. The RBI had raised its projection due to elevated inflation figures in July and August.

Core Inflation Remains Stable:

Core inflation, which excludes volatile items like food and fuel, is expected to remain stable. This is particularly positive news for the RBI, which faces pressure to control inflation amid rising global crude oil and food prices.

The expected decline in India's retail inflation for September offers a glimmer of hope on the economic horizon. While core inflation remains stable, concerns persist as inflation is likely to breach the RBI's upper tolerance limit. The RBI will be closely monitoring input cost pressures, especially in light of high global crude oil prices. The forthcoming official data release will provide a clearer picture of the nation's economic trajectory in the months ahead.