Retail inflation hits a record low in Oct

India’s retail inflation plunged to a record low of 0.25% in October from 1.44% the previous month, creating more room for a potential interest rate cut in December.

- Manjul Paul & Pragya Srivastava

Behind the sharp fall in inflation was the statistical effect of a favourable base a deeper deflation in food items, and some impact of the goods and services tax (GST) cuts.

Despite high expectations, the impact of GST cuts was not fully felt in inflation data due to the limited pass-through of the benefits, as well as a sharp rise in prices of gold and silver offsetting effects, economists said.

The latest print is broadly in line with the median estimate of 0.3% by 16 economists in a Mint poll.

Surging gold and silver prices drove core inflation, which excludes food and fuel groups, up to 4.33% in October from 4.26%. However, as per Barclays, core core inflation, which excludes the impact of gold and silver, moderated to 2.6% in October from 3.1% in September, reflecting benefits from the GST rate cut in select items.