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India's retail inflation dropped to 0.25% in October, a record low for the CPI series
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Food prices fell 5.02% amid GST cuts and a favorable base effect, aiding inflation decline
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Inflation remained below RBI's 2-6% target for the third time this quarter
India's retail inflation slipped to a record low in October, as food prices continued to fall and the full impact of GST rate cuts funnelled through the economy.
The Consumer Price Index (CPI)-based inflation was 0.25%, compared to 1.44% in September, according to data shared by the Ministry of Statistics on Wednesday. It is the lowest year-on-year inflation of the current CPI series. Analysts tracked by Bloomberg had estimated the inflation at 0.4%.
The government attributed the decline in headline inflation and food inflation during October to the reduction in GST rates, favourable base effect and drop in prices of oils and fats, vegetables, fruits, egg, footwear, cereals and products, etc.
Food prices fell by 5.02%, and food and beverage prices dropped 3.72%.
India's retail inflation continues to remain well below the Reserve Bank of India's comfort range of 2-6%. The inflation slipped below the lower band of the RBI's target for the third time in this quarter.
Economists at Barclays expect the central banks' Monetary Policy Committee to revise its inflation forecast for FY26 further lower in the upcoming December meeting, while delivering the last rate cut of 25 basis points for this cycle.
Inflation Internals
Food basket
Cereals and products prices up 0.92%
Meat and fish prices up 1.74%
Egg prices up 1.33%
Vegetable prices down 27.57%
Oils and fats prices up 11.17%
Pulses and products prices down 16.15%
Milk and products prices up 2.35%
Spices prices down 3.29%
Sugar and Confectionery prices up 4.02%
Housing prices went up by 2.96%, clothing and footwear prices by 1.7% and fuel and lighting prices by 1.98%.
Core Inflation
Core inflation, which excludes the volatile food and fuel prices, rose to 4.49% in October compared to 4.37% in the preceding month. This print was the highest since September 2023.
The volatility of international gold prices is contributing to the stickiness of the overall core inflation figure, according to analysts at Bank of Baroda.
"The GST impact on core inflation is still not felt fully as the pass-through is incomplete. By November, the impact on core inflation should be more visible," a note said.
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