Retail inflation in India fell to 4.87 percent year on year in October, according to figures issued on Monday by the Ministry of Statistics and Program Implementation. Reuters polled 53 economists and found the rate to be 4.80%. Inflation continues above the Reserve Bank of India's median objective of 4%. Prices had fallen to 5.02 percent in September as a result of lower vegetable prices.
Inflation rates in urban and rural areas were 4.62 percent and 5.12 percent, respectively, down from 6.50 percent and 6.98 percent in the same month last year. Volatile food prices, which account for over half of the consumer price index (CPI) basket, have calmed after rising in July and August. The Consumer Food Price Index (CFPI) inflation rate was 6.61 percent in October, compared to 6.62 percent in September and 7.01 percent in October 2022.
For the second consecutive month, October inflation fell below the RBI's upper tolerance zone of 2-6 percent, but the central bank last month held its benchmark lending rate stable for a fourth consecutive policy meeting and stated that it is committed to reducing inflation closer to the target of 4%.
RBI Governor Shaktikanta Das stated in early October that the central bank is on high alert and ready to take action to align inflation with the objective. Despite recent inflationary pressures, India is vulnerable to "recurring and overlapping" food price shocks, according to Das on Thursday.
"In these circumstances, monetary policy remains vigilant and actively disinflationary to gradually align inflation to the target while supporting growth," Shaktikanta Das said in a speech in Japan.
In its October meeting, the RBI's rate-setting panel, the Monetary Policy Committee (MPC), projected CPI inflation at 5.4 percent for 2023-24, down from 6.7 percent in 2022-23. According to a separate Reuters poll, the central bank is predicted to retain its key policy rate at 6.50 percent at least until the end of June 2024 before dropping it by 25 basis points the following quarter.