Retail inflation falls to 4.35% in September; lowest in five months
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Retail inflation falls to 4.35% in September; lowest in five months

New Delhi: Retail inflation fell to a five-month low of 4.35 per cent in September from 7.27 per cent in the year-ago period as prices of vegetables and other items declined, according to government data released on Tuesday.

The moderation in Consumer Price Index-based inflation is in line with the assessment of Reserve Bank Governor Shaktikanta Das who recently projected substantial softening of retail inflation. The CPI inflation was at 5.3 per cent in August and at 7.27 per cent in September 2020.

Previously, the CPI was low at 4.23 per cent in April 2021. As per the data released by the National Statistical Office (NSO), the inflation in food segment eased to 0.68 per cent in September, significantly down from 3.11 per cent in the preceding month.

The data showed that inflation in the vegetables basket contracted 22.47 per cent in September compared to a decline of 11.68 per cent in August. The rate of price rise was also lower in fruits, eggs, meat and fish, and pulses and products segments. However, the inflation was higher in the case of fuel and light at 13.63 per cent in September compared to 12.95 per cent in August.

Aditi Nayar, Chief Economist at Icra, said that while the extent of the fall in the year-on-year CPI inflation to 4.35 per cent in September 2021 from 5.3 per cent in the previous month is considerable, and higher than Icra’s forecast, it has been driven primarily by food items, and to a small extent, housing.

A high base is expected to temporarily dampen the CPI inflation for October-November 2021 to below 4 per cent before an upturn resumes in the remainder of this fiscal, she added. “In our view, the MPC (Monetary Policy Committee) will choose to continue to ignore supply side risks to inflation, especially if they emanate from a global surge in commodity prices, on which monetary policy has little impact, and change the stance only after a durable domestic demand revival emboldens producers to raise prices,” Nayar said.

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