India’s retail inflation, which is measured by the Consumer Price Index (CPI), fell sharply to 6.77% year-on-year in October from 7.41% in September 2022. This is the tenth straight month that inflation has been over the 6% tolerance limit for the Reserve Bank of India (RBI).
Inflation in rural areas in October 2022 eased to 6.98%, while that in urban areas slipped to 6.50%, as per the latest official data.
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According to the latest data from the National Statistical Office (NSO), inflation in the food segment came in at 7.01% as against 8.6% in September. The inflation rate for vegetables came in at 7.7%.
Fuel and light inflation slipped to 9.93% as against 10.39% in September.
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Earlier this month, the central bank’s Monetary Policy Committee (MPC) met to deliberate on the explanation to be sent to the government for its inability to meet the target for three consecutive quarters.
The RBI Governor Shaktikanta Das had expected the inflation to be lower than 7% in October.
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The slowdown in headline inflation can be attributed to the favorable base effect. However, the supply-chain issues due to ongoing geopolitical situations and increasing commodity prices globally continue to thrust ahead the inflationary pressure.
The RBI has raised the benchmark repo rate by 190 basis points since May this year. In May, the central bank conducted its off-cycle monetary policy review to hike the repo rate by 40 basis points to curb inflation. The next RBI MPC meeting is expected on December 5-7, 2022.
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Soaring inflation has been a concern for central banks across the globe, including India, as the uncertain nature of Russia’s invasion of Ukraine prompted supply chain disruptions in the post-pandemic world that was barely going through a nascent recovery from economic shocks.
According to the RBI estimates, inflation is expected to come down to 6.5% in the third quarter of fiscal 2022-23 and 5.8% in the last quarter.
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The Ministry of Commerce released data for India’s wholesale price index-based (WPI) inflation for October which came in at 8.39% year-on-year. The wholesale inflation has dropped below the double-digit mark for the first time since March 2021 when it was at 7.89%.