Oct retail inflation dips to series-low of 0.25%

Sustained fall in vegetable prices, GST cuts pull down the index

- KULDEEP SINGH

RETAIL INFLATION PLUNGED to a series-low of 0.25% in October due to a favourable base effect, drop in the prices of vegetables, cereals, fruits and the impact of decline in the Goods and Services Tax (GST), according to data released by the National Statistics Office (NSO) on Wednesday.

The inflation rate fell much below the lower end of Reserve Bank of India's (RBI) tolerance band of 2%, increasing the chances of a rate cut in December, or later in the second half of the current fiscal.

This is the third instance in the last four months when the inflation breached the lower end of RBI's tolerance band; it remained below the central bank's medium-term target of 4% for the nine consecutive month. Inflation had eased below 2% in September (revised to 1.44%) and July (1.61%) too.

October inflation is lowest in the current Consumer Price Index (CPI) series with 2012 as the base year. Sequentially, the index was, however, marginally higher in October from September level.