India's retail inflation eased to a 3-month low of 5.02 per cent in September bringing much-needed relief to consumers, according to official figures released on Thursday.
Food inflation, which accounts for close to half of the overall consumer price index (CPI), slowed to 6.56 per cent in September from 9.94 per cent in August. There was a sharp correction in the prices of vegetables, such as tomatoes and onions.
Cooking oil prices came down drastically to record a fall of over 14. However, pulses and spices still remain areas of concern.
The data show that inflation in pulses was still at 16.38 per cent while spices clocked a price rise of 23.06 per cent during the month for cereals the price increase was 10.95 per cent.
The decline in the inflation rate is line with the expectation of the RBI, which had kept its key interest rate unchanged on October 6 for a fourth consecutive meeting in order to keep up the growth rate.
The consumer price inflation is now closer to the 4 per cent midpoint of the RBI's 2-6 per cent target range and will enable the central bank to keep interest rates on hold going ahead even as there is a downside risk due to the uncertainty in global crude oil prices which could push up inflation.
According to Rupa Rege Nitsure, Group Chief Economist of L&T Financial Services, there is still a need to be cautious as the effects of the erratic monsoon this year still has to play out and geopolitical tensions such as the Israel-Hamas conflict may roil the oil markets.