India’s inflation rate eased in September, aligning with the central bank’s target. According to preliminary government figures released on Thursday, the consumer price index (CPI) increased by 5.02% compared to the same month last year, down from the 6.83% recorded in August. This figure also fell below economists’ expectations of a 5.5% rise, as per a FactSet poll.
Slowdown in Food Prices and Other Key Factors
In September, food prices continued to ease, showing a growth of 6.30% compared to over 9% in the previous month. The rates of increase in clothing & footwear and housing prices also slowed down. Notably, fuel prices witnessed a decline from the previous year.
Implications for Monetary Policy
The notable easing in the inflation rate falls within the Reserve Bank of India’s target range of 2%-6%. As a result, there is speculation that the central bank may start considering a slight loosening of its monetary policy. In its latest decision, the RBI chose to maintain its policy repo rate at 6.50%, keeping it unchanged since February of this year when it was steadily raised from 4.00% starting May 2022.