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Retail inflation decreased to a three-month low of 5.02% in September, down from 6.83% in August, primarily driven by a reduction in food prices, according to government data released on Thursday.
Significantly, inflation has returned to the Reserve Bank of India’s preferred range of under 6% after a two-month hiatus. In August, the Consumer Price Index (CPI) showed an inflation rate of 6.83%, and in September 2022, it was 7.41%.
As per data released by the National Statistical Office (NSO), the inflation rate for food items decreased from 9.94% in the previous month to 6.56% in September. The Reserve Bank of India primarily considers retail inflation when determining its bi-monthly monetary policy decisions.
Commenting on the decline in the inflation rate, Finance Minister Nirmala Sitharaman noted that domestic disruptions and global uncertainties may continue to exert upward pressure on inflation in the coming months. The ongoing Israel-Palestine conflict and the Ukraine-Russia war present a dual challenge to the global economy. Sitharaman emphasized that domestic consumption and investment demand will be the key drivers of India’s growth, speaking at the 108th Meeting of the Development Committee Plenary in Marrakech, Morocco, where the agenda was “Ending Poverty on a Livable Planet – Report to Governors on World Bank Evolution.”
The Consumer Food Price Index recorded a 2.2 percent month-on-month (MoM) decrease in September, primarily driven by a significant 15.8 percent sequential drop in vegetable prices. Consequently, food inflation declined to 6.56 percent, down from 9.94 percent in August. This drop was particularly influenced by the substantial decrease in tomato prices, which had contributed to headline retail inflation reaching 7.44 percent in July – the highest rate in 15 months. Nonetheless, it’s important to note that other inflationary pressures persist in the food segment, excluding vegetables.
