Retail inflation dropped to series low of 0.25% in Oct on base effects

India’s retail inflation eased sharply to a series low of 0.25 per cent in October from 1.44 per cent in September, thanks to a favorable base effect, a record 5 per cent drop in food prices, and the initial impact of GST rates’ rationalisation, according to data released by the National Statistical Office (NSO) on Wednesday.

- HIMANSHI BHARDWAJ

This marks the lowest year-on-year inflation print since the introduction of the current Consumer Price Index (CPI) series (base year 2012), with the food basket slipping deeper into deflation at (-)5.02 per cent compared with (-)2.33 per cent in the previous month.

In rural India, retail prices slipped into deflationary zone with the NSO reporting a 0.25 per cent drop in the CPI (Rural), compared to a 1.07 per cent increase in September. Urban inflation, on the other hand, moderated from 1.83 per cent in September to 0.88 per cent in October. Rural food prices were down 4.85 per cent, while they fell 5.18 per cent in urban areas.

OThe record downtick in price pressures is likely to create room for the Monetary Policy Committee of the RBI to cut interest rates at its upcoming review in December, said most economists. October's CPI is the final print before the MPC meets again from December 3 to December 5. After slashing the key interest rate by 100 basis points (bps) to 5.50 percent between February and June, the MPC had kept interest rates unchanged for the second successive time at its last bi-monthly review which concluded on October 1.