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4w ago

Retail Inflation Hits Record Low as Wholesale Prices Fall Into Deflation

GST cuts plus steep food deflation drove the slide, raising odds of an RBI rate cut in December.

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October is the ninth consecutive month in which headline inflation has stayed below the 4% target of RBI. (Bloomberg)

Overview

  • Headline CPI fell to 0.25% year on year in October, down from a revised 1.44% in September, the lowest reading in the current CPI series.
  • Food inflation dropped to -5.02%, with sharp declines in vegetables (-27.6%), pulses (-16.1%) and onions (-54.3%) leading the fall.
  • Core inflation excluding food and fuel hovered around 4.4–4.49%, indicating underlying price firmness despite the headline plunge.
  • WPI inflation registered -1.21% in October, reflecting deflation across food, fuel and parts of manufacturing at the wholesale level.
  • The government attributed the cooling to GST rate rationalisation, a favorable base and easing commodity prices, while economists said the data strengthens the case for December monetary easing even as outcomes hinge on growth, trade developments and state-level divergences such as Kerala’s 8.56%.