Has the Reserve Bank firmly tamed inflation?

Retail inflation has been declining for months and in August, it was a comfortable 2.07%.

- BY N. MADHAVAN

Mint looks at the reasons that contributed to the decline in prices, how sustainable they are, and factors that can play spoilsport. In other words, has India finally tamed inflation?

1 What has contributed to benign inflation? Low inflation has mainly been due to the fall in prices of vegetables and other food articles such as cereals, thanks to robust Rabi and Kharif crops last year.

The overall food inflation was a low 0.7% in August. Core inflation, which strips out the volatile food and fuel components, held its ground too at 4.3% as against 4.1% in July. Fuel inflation declined marginally.

Experts said that excess capacity in China has had a role in India's lower core inflation, thanks to cheap imports. Today, consumer price inflation is at the lower end of the Reserve Bank of India's (RBI's) comfort zone of 2% to 6%.

2 What is the outlook 2 for FY26?