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India’s CPI inflation drops to 3-month low of 6.77% in October

CPI Inflation: The headline retail inflation rate in India decreased to a three-month low of 6.77 percent in October, from 7.41 percent in the preceding months, according to data issued on November 14 by the ministry of statistics and programme implementation.

The most recent Consumer Price Index (CPI) inflation reading of 6.77 percent is roughly in line with expectations. According to a Moneycontrol poll, inflation was forecast to drop to 6.7%.

The Reserve Bank of India (RBI) also anticipated a decline in inflation. Governor Shaktikanta Das stated that the central bank observed CPI inflation falling below 7 percent in October while speaking at an event on November 13.

CPI Inflation

Inflation has now spent 10 months in a row above the RBI’s tolerance band of 2 to 6 percent, despite the significant drop in October. The CPI inflation rate has gone over the medium-term target of 4% for 37 consecutive months.

A favourable base effect, which more than offset a 0.8 percent month-over-month gain in the general index of the CPI, was the primary cause of the decrease in inflation in October.

The overall index had increased by 1.4 percent month over month in October 2021, which served as the base month for the most recent inflation print. The inflation rate might have dropped as low as 5.9 percent if the index hadn’t changed at all last month, which would indicate that there was no price momentum.

However, the statistics showed that the indices for each of the six groupings of the CPI basket posted a consecutive rise, making an unchanged index implausible.

The food price index increased 1.1 percent month over month even as food inflation decreased to 7.01 percent in October from a 22-month high of 8.6 percent in September.

10 out of 12 subgroups in the CPI’s “food and beverage” category saw their index increase month over month. Vegetables experienced the largest growth (4.1%), followed by spices (1.3%) and grains (1 percent).

At 0.5 percent, the sequential increase in the gasoline index was significantly less than the increase in the food index.

According to analysis done by Moneycontrol, core inflation, which is defined as inflation less the volatile food and fuel categories, decreased slightly from 6.1 percent in September to 6 percent in October.

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