Retail Inflation Hits Eight-Year Low as Food Prices Fall

In a significant economic development, retail inflation in India has plunged to an over eight-year low of 1.54% in September, driven by a remarkable decline in food prices, government data revealed on Monday. This decline positions the inflation rate below the Reserve Bank's comfort zone.

The National Statistics Office (NSO) pointed out that September's headline inflation decreased by 53 basis points compared to August. Year-on-year food inflation saw a dramatic swing, reported at (-) 2.28% for September, compared to (+) 9.24% the previous year, attributed to a favorable base effect and falling prices of essential commodities like vegetables, fruits, and pulses.

Experts forecast that retail inflation could ease further due to ongoing GST rate rationalizations and benign weather conditions affecting crop production positively. Analysts believe this trend could lead to a potential rate cut by the Reserve Bank in December, contingent on economic data and market conditions.

(With inputs from agencies.)