New Delhi- Indicating easing of the price situation, retail inflation moderated to 6.7 per cent in October while the wholesale price index fell to a 19-month low mainly on account of subdued rates of food items.
The fall in consumer price index-based retail inflation to 6.77 per cent in October from 7.41 per cent in September has also brought some relief for the Reserve Bank which has been struggling to bring it below the upper tolerance level of 6 per cent since January this year.
Retail inflation is the lowest in three months.
In a series of tweets, the finance ministry said prices of commodities like crude oil, iron ore and steel sobered in global markets. This, coupled with measures taken by the government to rationalise tariff structures of major inputs to augment domestic supply, helped keep cost-push inflation in consumer items under control.
“Further, the Government has taken trade-related measures on wheat and rice to keep domestic supplies steady and curb the rise in prices. The impact of these measures is expected to be felt more significantly in the coming months,” it said.
The central bank has been tasked to keep inflation at 4 per cent with a margin of 2 per cent on either side. The RBI, which could not meet the target for three consecutive quarters, has sent a report to the government on its failure to keep the inflation below 6 per cent.
As per CPI data released by the National Statistical Office (NSO), retail inflation in the food basket was 7.01 per cent in October compared to 8.6 per cent in the preceding month.
The data also revealed that annual inflation was subdued in eggs, meat and fish, oil and fats, and ‘sugar and confectionary’ segments.
The WPI data released by the commerce and industry ministry showed that the decline in October inflation is primarily contributed by fall in the price of mineral oils, basic metals, fabricated metal products, except machinery and equipment; textiles; other non-metallic mineral products; minerals.
The wholesale inflation declined for the fifth consecutive month.
Commenting on the CPI data, Dharmakirti Joshi, Chief Economist of CRISIL said the headline print was expected to moderate due to the base effect and some sequential easing in cereals and pulses inflation.
“Going forward, we expect inflation to moderate on continuing base effect,” he said.
Narinder Wadhwa, President of Commodity Participants Associations of India (CPAI) said the CPI at 6.77 per cent in October against 7.41 per cent in September indicates that “we have seen the peak in the index and going forward we can expect an easing of CPI and WPI numbers”.
The Reserve Bank has hiked interest rates by 190 basis points between May to September to 5.90 per cent to tame persistently high inflation.
The next meeting of the RBI Governor-headed Monetary Policy Committee (MPC) is scheduled during December 5-7, 2022.
The finance ministry further said the decline in prices of vegetables, fruits, pulses and oils and fats contributed significantly to the reduction in containing food price inflation.
To soften the prices of edible oils and pulses, tariffs on imported items have been rationalised from time to time and stock limits on edible oils maintained, to avoid hoarding, it added.