CPI inflation in October likely at 4.8%, a 5-month low

The statistical effect of a high base and the decline in prices of essential vegetables have been the key drivers of the fall in inflation. 

October is likely to witness a decline in India’s Consumer Price Index (CPI)-based inflation. From 5.02% in September, CPI inflation is expected to fall to a five-month low of 4.8% in October. The statistical effect of a high base and the decline in prices of essential vegetables are the main drivers of the drop in inflation, according to some economists.

The National Statistical Office will release the October CPI inflation data on Monday, November 13.

Food inflation, which accounts for about 39% of the CPI, is anticipated by the Centre for Monitoring Indian Economy (CMIE) to have decreased to a four-month low of 6.05% in October from 6.56% in September.

In a note, CMIE’s Sameeksha Kumar said, “A fall is likely to be seen across food groups…inflation in vegetables is expected to have fallen to around 2% in October, compared to 3.39% in the month prior. This is mainly due to a fall in inflation in tomatoes and potatoes.” 

As per the data released by the Department of Consumer Affairs, during October month, the retail prices of tomatoes dropped 24.5% month-on-month, but that of potatoes remained unchanged. Onions meanwhile saw a sequential price increase of 11.6%. Prices of rice and wheat were up 1.0% and 0.6%, respectively, month-on-month. Prices of pulses went up by 2.0%.

Inflation rates of cereals, spices, and pulses which collectively form 15% of the CPI basket, have however remained in double digits for the past several months. This might keep food inflation above 6% in the second half (H2) of FY24.

According to economists, core inflation which does not include volatile components of food and fuel, likely remained flat at 4.5% in October.