The moderation in inflation figure is mainly on account of moderating food prices that offset a surge in the cost of crude oil and fuel.
The inflation number stayed within the Reserve Bank of India’s (RBI) comfort zone for the third straight month.
The RBI mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
Reserve Bank’s monetary policy committee (MPC) has been tasked by the government to tame retail inflation based on consumer price index (CPI) at 4 per cent (+,-2 per cent).
RBI’s projection on inflation
In its October bi-monthly monetary policy meet, the Reserve Bank of India (RBI) projected substantial softening in retail inflation in the near term on the back of easing food prices and favourable base effect.
Accordingly, it projected CPI-based inflation to be at 5.3 per cent for 2021-22 with risks evenly balanced.
This is lower than 5.7 per cent inflation projected in its August policy meet.
On a quarterly basis, the CPI for Q2 has been projected at 5.1 per cent: Q3 at 4.5 per cent and Q4 at 5.8 per cent. CPI inflation for Q1:2022-23 is projected at 5.2 per cent.
What RBI governor said
Headline inflation continues to be significantly influenced by very high inflation in select items such as edible oils, petrol and diesel, LPG and medicines, central bank governor Shaktikanta Das had said while announcing the policy outcome.
“The CPI headline momentum is moderating with the easing of food prices which, combined with favourable base effects, could bring about a substantial softening in inflation in the near-term,” Das had said.
According to him, improvement in monsoon in September, the expected higher kharif production, adequate buffer stock of foodgrains and lower seasonal pickup in vegetable prices are likely to keep food price pressures muted.
(With inputs from agencies)