By Nikunj Ohri
NEW DELHI (Reuters) -India’s annual retail inflation slowed to 1.54% in September, an eight-year low, as food prices eased, government data showed on Monday.
It was 2.07% in August, and below a Reuters poll of 1.7%. Retail inflation was the lowest since June 2017, the government said.
The figure has also dropped below the Reserve Bank of India’s 2%-6% tolerance band for a second time in three months. It had eased below 2% in July.
The RBI is mandated to not let inflation overshoot its tolerance range of 2%-6% for more than three quarters in a row.
Food prices fell 2.28% year-on-year in September versus a revised 0.64% drop in August. Vegetable prices declined 21.38% after a 15.92% fall in the previous month.
Softer food prices prompted the RBI this month to trim its inflation forecast for the current financial year to 2.6% from 3.1%. In its October review, the central bank kept the policy rate unchanged at 5.5% but signalled scope for a rate cut in December.
The U.S. has imposed tariffs of up to 50% on Indian goods but Prime Minister Narendra Modi’s tax cuts on everything from soaps to cars are expected to offset the impact on growth and ease inflation during the September–December festival season.
The central bank has reduced interest rates by 100 basis points so far this year, and raised its economic growth forecast to 6.8% from 6.5%, putting it at the upper end of the government’s 6.3%–6.8% estimate.
At this pace, India would continue to grow at the fastest pace among major economies.
(Reporting by Nikunj Ohri; Editing by Janane Venkatraman)
Comments