Retail inflation eases to 6.77% in October from 7.41% in September

Retail inflation eased to a three-month low of 6.77 per cent in October. This is lower than the five-month high of 7.41 per cent in September. According to the data released on Monday, this decline in the retail inflation rate is due to softening in the prices of food items. However, despite the decline, the retail inflation rate in the month of October is still above the RBI’s target band of 2 to 6 percent. Inflation has been above this band every month of this year.

India’s central bank Reserve Bank of India mainly considers retail inflation inflation as the basis for monetary policy formulation. In such a situation, softening of prices is a positive sign for RBI. For some time now, RBI has been trying to stimulate the economy while fighting high inflation. The RBI has increased its key interest rate four times this year to 5.90 per cent – the highest since April 2019. This lower price is in line with the assessment of RBI Governor Shaktikanta Das on Saturday, who had predicted that retail inflation could come down to 7 per cent in October from 7.41 per cent in September.

Speaking at an event in New Delhi, the RBI governor had said that inflation is an important concern for India. He had said that the central bank and the government have taken several steps in the past months to effectively deal with it. Despite a decline in inflation, the RBI has failed to manage price increases under the flexible inflation targeting framework (2-6%) implemented in 2016. CPI-based inflation has remained above the 2-6 per cent range for three consecutive quarters.