India's retail inflation cools to 6.77% in October, but still above RBI's comfort limit

India's retail inflation in October dropped to 6.77 per cent, but still remained above the comfortable limit of 6 per cent set by the Reserve Bank of India (RBI). October's inflation number is down from 7.41 per cent in September and 7 per cent in August. The decline in retail inflation is mainly due to a decrease in food price inflation, the Finance Ministry said. 

The Consumer Food Price Inflation moderated significantly in October to 7.01 per cent, which is lower than 8.6 per cent recorded in September. The decline in prices of vegetables, fruits, pulses, and oils & fats contributed significantly to the reduction in containing food price inflation. 

Prices of commodities like crude oil, iron ore, and steel sobered in global markets. This, coupled with measures taken by the government to rationalise tariff structures of major inputs to augment domestic supply, helped to keep cost-push inflation in consumer items under control, the ministry added. 

The ministry said that to soften the prices of edible oils and pulses, tariffs on imported items have been rationalised from time to time and stock limits on edible oils maintained, to avoid hoarding. Inflation in 'oils and fats' and 'pulses and products' moderated to -2.15% and 2.78%, respectively. 

Further, the government has taken trade-related measures on wheat and rice to keep domestic supplies steady and curb the rise in prices. The impact of these measures is expected to be felt more significantly in the coming months, the ministry said. 

The latest inflation number is in line with RBI Governor Shaktikanta Das's prediction on Saturday. He said that CPI (Consumer Price Index) - which measures the overall change in consumer prices - would be lower than 7 per cent.

In September, the country's retail inflation had touched 7.41 per cent due to high food prices, and supply shocks from Russia’s invasion of Ukraine. This was the ninth straight month when the CPI number was above the RBI's upper inflation limit of 6 per cent.

The RBI has the mandate of keeping inflation at 4 per cent with a two per cent variation on either side - that sets the lower limit at 2 and the upper limit at 6 per cent. However, India's retail inflation breached the upper limit in January and has been above it since then. In April, May, June, and August, the inflation was above 7 per cent.   

Earlier today, the Centre put out the Wholesale Price Inflation (WPI) numbers for October. The WPI for the month of October stood at 8.39 per cent against 10.7 per cent in September, which is a decline of over 2 per cent.

The Commerce and Industry Ministry said that the decline in WPI inflation in the month of October can be attributed to a drop in the price of mineral oils, basic metals, fabricated metal products (except machinery and equipment), textiles, other non-metallic products, minerals, etc.