Retail inflation, measured by the consumer price index (CPI), fell sharply in September to 4.31 per cent, a 13-month low. In the previous month, the CPI had grown by 5.05 per cent and in September 2016, 4.41 per cent. This brightens the chances of rate cut by the Reserve Bank of India.
Low retail inflation was mainly because of the low consumer food price index (CFPI), which stood at 3.88 per cent, down from 5.91 per cent in August.
The RBI links retail inflation with the lending rate. At present, the central bank is committed to contain inflation at 4 per cent, within 2 per cent range on both sides.
According to the data released by the Central Statistics Office (CSO), inflation in the vegetable segment was in the negative territory, -7.21 per cent. The corresponding number for August was 1.02 per cent.
The prices of pulses and egg and milk (and its products) were subdued. Ditto with meat and fish basket.
Fruits, however, bucked the trend. Similarly, the CPI in fuel and light segment was 3.07 per cent in September, more than 2.49 in August.
Retail inflation in urban areas actually fell below the 4-per cent mark, coming down to 3.64 per cent in September as against 4.22 per cent in August. Rural retail inflation too decline to 4.96 per cent in September, against 5.87 per cent in August.