Indian Inflation Rate Eases in September


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.

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